Synopsis: Shares of One97 Communications (Paytm) are in focus after strong Q1FY27 results showed revenue growth, higher EBITDA, and improved profitability. The company skipped a bonus share announcement, while brokerages maintained Buy ratings, citing growth in financial services, merchant expansion, and improving margins.
The shares of a Mid-Cap company specialising in digital payments and financial services distribution in India and its core offerings, including mobile payment solutions, are in focus following its Q1 Results.
With a market capitalization of Rs. 84,669.66 crores in the day’s trade, the shares of One 97 Communications Ltd rose upto 2.58 percent, reaching a high of Rs. 1,382.90 per share compared to its previous closing price of Rs. 1,348.00 per share.
What Happened
One 97 Communications Ltd, engaged in providing digital payment services and financial services distribution, is in focus following its Q1 Results. One97 Communications reported a strong Q1FY27 performance, with revenue rising to Rs. 2,448 crore from Rs. 1,918 crore YoY, marking a 27.63% growth and an 8.13% increase QoQ. The company’s EBITDA jumped significantly to Rs. 203 crore from Rs. 72 crore YoY, reflecting a 181.94% growth, while EBITDA margin improved to 8.29% from 3.75% YoY and 5.83% QoQ.
Profitability also strengthened, with PAT increasing to Rs. 220 crore compared with Rs. 123 crore in the same quarter last year, a growth of 78.86% YoY and 20.22% QoQ. The improvement indicates better operating efficiency and stronger business performance.
However, other income declined to Rs. 182 crore from Rs. 241 crore YoY, while remaining slightly higher than Rs. 178 crore in the previous quarter. Despite lower other income, Paytm delivered healthy growth across key financial metrics, supported by improved margins and operational gains.
Paytm: No Bonus Shares Announcement
One97 Communications’s board has decided not to proceed with a bonus share issue at this time. The company highlighted that its priority remains on driving sustainable growth, improving profitability, and creating long-term value for shareholders. The board emphasized continued focus on business expansion and compounding growth opportunities rather than issuing bonus shares currently.
Other Updates
Paytm has proposed an additional investment of up to Rs. 100 crore in its wholly owned subsidiary, Paytm Money Limited (PML), through a Rights Issue, subject to necessary approvals. The investment will support PML’s growth plans, including technology upgrades, regulatory capital needs, and expansion of its investment and wealth management businesses.
The company’s Board has also approved seeking shareholders’ approval to revise the utilisation of the remaining Rs. 1,686 crore from its IPO proceeds and extend the utilisation timeline until March 31, 2029. The revised plan will provide flexibility to use the funds across key areas such as strengthening Paytm’s ecosystem, acquiring and retaining customers and merchants, and expanding technology and financial services initiatives.
Brokerage Views
Citi on Paytm: Maintains Buy Rating
One97 Communications, Citi has maintained its Buy rating on Paytm and raised the target price to Rs. 1,560 from Rs. 1,425. The brokerage highlighted strong EBITDA momentum driven by growth in financial services and lower cloud costs.
Citi noted that Paytm is witnessing faster growth across both merchant and consumer businesses, leading to improved operating leverage. The brokerage sees further earnings upside in terms of both quantum and quality, especially if UPI-MDR is introduced.
Goldman Sachs on Paytm: Maintains Buy Rating
One97 Communications, Goldman Sachs has maintained its Buy rating and raised the target price to Rs. 1,500 from Rs. 1,430, following a strong Q1FY27 performance that led to estimate upgrades.
Goldman Sachs highlighted growth driven by market share gains across offline and online segments, along with sustained momentum in merchant loan distribution. The brokerage also noted Paytm’s wallet license application as a potential additional revenue driver and expects EBITDA margins to double from Q1FY27 levels by FY28.
Company Overview & Others
One 97 Communications Ltd is an Indian technology company founded in 2000 by Vijay Shekhar Sharma. It is the parent company of Paytm, a leading digital payments and financial services platform in India. The company provides services such as mobile payments, online banking, digital wallets, loans, insurance, and other financial products.
It aims to promote digital transactions and financial inclusion by using technology to connect consumers, merchants, and businesses. Through Paytm, it has played an important role in the growth of India’s digital payment ecosystem.
The company has a decent Return on Capital Employed (ROCE) of 5.01% and Return on Equity (ROE) of 4.70%, indicating moderate efficiency in using capital and generating returns for shareholders. Its debt-to-equity ratio of 0.01 reflects a very low debt burden and a financially stable balance sheet.
The company has delivered strong profit growth, with a 19.5% CAGR over the last 5 years. It has also maintained healthy sales growth, with a median sales growth rate of 22.3% over the past 10 years, showing consistent business expansion and revenue generation.
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