Paytm returns to 2.94% operating margin, but shares fall 5.97%
Revenue growth outpaced expense growth, but other income still supplied 73.68% of pre-tax profit and the stock's next-session decline exceeded its usual move.
Filed 20 Jul 2026, 22:04 IST · after market close · One 97 Communications Ltd (PAYTM)
Key takeaways
- Consolidated operating margin recovered to 2.94%, up 7.87 percentage points year on year after reaching 0% in Q4FY26.
- Net profit rose 79.59% year on year to Rs 220 cr, but other income contributed 73.68% of profit before tax.
- The stock fell 5.97% by the next session, versus a 4.93% median absolute move after the company's past eight results.
Price around the results
Operating profit moves back into positive territory
Consolidated revenue grew 27.67% year on year and 8.13% sequentially, while operating profit improved from a loss a year earlier and from zero in Q4FY26 to Rs 72 cr. The operating margin recovery of 7.87 percentage points year on year and 2.94 percentage points sequentially marks a reversal after the margin slipped from 1.05% in Q3FY26 to 0% in Q4FY26.
Lower expense growth supported the margin, but profit quality remains mixed
Expenses grew 18.09% year on year and 4.95% sequentially, slower than revenue growth of 27.67% and 8.13%, respectively, supporting the margin expansion. Other income fell 24.61% year on year but rose 2.25% sequentially, and still accounted for 73.68% of pre-tax profit. The tax rate increased to 10.93% from 3.17% a year earlier and 5.67% in Q4FY26, while interest expense rose 75% year on year and 40% sequentially.
Paytm remains the lowest-margin reporter among 22 financial peers
Among 22 Financial Services companies that have reported the same quarter, Paytm's 2.94% operating margin was 69.28 percentage points below the sector median of 72.22%. It ranked first from the bottom on this measure. The quarter therefore shows an improvement in Paytm's own margin trajectory, but not a convergence with the reported peer set.
The initial market reaction was negative and intensified on the next session
The stock fell 3.49% on the first reaction day, including a 0.78% gap down, with volume at 3.24 times the reference level. The decline reached 5.97% by the next session, larger than the 4.93% median absolute move after the company's past eight results. Historically, the stock rose after five of those results and fell after three.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,448 cr | ₹2,264 cr | +8.13% | +27.67% |
| Other income | ₹182 cr | ₹178 cr | +2.25% | -24.61% |
| Expenses | ₹2,376 cr | ₹2,264 cr | +4.95% | +18.09% |
| Operating profit | ₹72 cr | ₹0 cr | — | — |
| Operating margin (%) | 2.94% | 0.00% | — | — |
| Interest | ₹7 cr | ₹5 cr | +40.00% | +75.00% |
| Depreciation | ₹131 cr | ₹132 cr | -0.76% | -21.13% |
| Profit before tax | ₹247 cr | ₹194 cr | +27.32% | +95.88% |
| Tax | ₹27 cr | ₹11 cr | +145.45% | +575.00% |
| Net profit | ₹220 cr | ₹183 cr | +20.22% | +79.59% |
| EPS (₹) | ₹3.44 | ₹2.87 | +19.86% | +79.17% |
Operating margin of 2.94% compares with a Financial Services sector median of 72.22% across 22 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -3.49% | -3.28% |
| Next session | -5.97% | — |
Volume on the results session was 3.24× its 20-day average.
What to watch
- Whether consolidated operating margin holds above 2.94% after the recovery from 0% in Q4FY26.
- Whether other income's contribution to pre-tax profit falls from 73.68%.
- Whether revenue growth remains ahead of expense growth, compared with 27.67% versus 18.09% year on year.