Paytm's share price surged nearly 12% on Wednesday, following the National Payments Corporation of India (NPCI) granting approval for the fintech giant to onboard new Unified Payments Interface (UPI) users. The stock jumped as much as 11.95%, reaching ₹769.50 per share on the Bombay Stock Exchange (BSE).
One 97 Communications, Paytm's parent company, announced that it had received the green light from NPCI to add new UPI users in compliance with the corporation’s procedural guidelines. This approval comes after the Reserve Bank of India (RBI) imposed restrictions earlier this year, limiting Paytm Payments Bank Ltd (PPBL) from onboarding new UPI users through the Paytm app.
The recent NPCI decision responds to a request from Vijay Shekhar Sharma, the Founder and CEO of One 97 Communications, made on August 1, aiming to lift the onboarding restrictions. Analysts view this approval as a significant step towards revitalizing Paytm's user base and indicative of a potential easing of regulatory constraints.
Anand Dama, Senior Research Analyst at Emkay Global Financial Services Ltd, noted, “Paytm has finally received NPCI approval for adding new UPI users, which paves the way for re-accelerating its dwindling user base and further signaling an easing of regulatory stance.”
In addition to the regulatory news, Paytm reported its second-quarter earnings for FY25, marking a significant financial turnaround. One 97 Communications posted a net profit of ₹930 crore for the September quarter, largely due to a one-time exceptional gain of ₹1,345 crore from the sale of its entertainment ticketing business.
The company experienced an 11% quarter-on-quarter revenue growth, driven by a 5% increase in Gross Merchandise Value (GMV), enhanced revenues from devices, and a 34% rise in financial services revenue. Paytm also reported a reduced EBITDA loss of ₹1.8 billion, down from a ₹5.5 billion loss in the first quarter, attributed to ongoing cost optimization efforts and the one-off gain from the entertainment business sale.
Looking ahead, Dama expressed optimism about Paytm’s prospects, stating, “Paytm’s cost optimization measures and gradual business turnaround should put it on an early path to profitability by FY26E/FY27E.” He added that the company’s future performance will depend on its ability to recover lost monthly active users, improve its lending business, and avoid further regulatory disruptions. Emkay retains an ‘Add’ rating on Paytm, with a discounted cash flow-based target price of ₹750 per share.
