(Bloomberg) — Paytm reported a bigger-than-projected quarterly loss after regulatory restrictions curbed the Indian fintech pioneer’s business.
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Net loss widened several times to 5.5 billion rupees ($66.1 million) in the three months to March, said parent company One 97 Communications Ltd. Analysts had estimated an average loss of 4.3 billion rupees. Sales fell 2.6% to 22.7 billion rupees – the first drop since the company’s stock market debut in 2021. Its shares fell more than 1% on Wednesday.
The payments company, once the beacon of India’s startup economy, is struggling to recover from a financial watchdog’s January orders that forced the liquidation of its banking affiliate. The restrictions were a blow to Paytm’s reputation and led analysts to speculate that digital payments customers could defect to rivals such as Walmart Inc’s PhonePe.
Paytm, based outside New Delhi, also competes with financial services offered by Amazon.com Inc., Alphabet Inc.’s Google and billionaire Mukesh Ambani’s Jio Financial Services Ltd.
Its shares have lost half their value since the regulator ordered Paytm Payments Bank Ltd., which processed transactions for Paytm, to suspend its main operations, citing non-compliance. The banking affiliate known as PPBL is not controlled by Paytm, although it is part of founder and CEO Vijay Shekhar Sharma’s fintech empire.
Since then, Sharma has moved quickly to steady the ship, establishing new partnerships with some of India’s top lenders, including Axis Bank Ltd., HDFC Bank Ltd. and State Bank of India Ltd. The alliances will help Paytm boost instant money transfers for customers by linking banks with your fintech app. Previously, Paytm used its banking affiliate to manage its digital wallets and payment traffic.
The company is also using partner banks to clear commercial transactions.
“We expect short-term financial impact on our revenues and profitability due to the disruptions faced in our business in the fourth quarter,” Sharma said in a letter to shareholders. “This includes the steady state impact due to the PPBL portfolio pause. We also paused some other payments and lending products for our customers during the last quarter and I am pleased to share that many of these products have restarted or are in the process of starting soon.”
Read: Paytm’s Sharma says company can overcome setbacks to lead in Asia
What Bloomberg Intelligence says
Paytm is poised for a strong return in sales and margins in fiscal 2026 after a past mired in regulatory issues, driven by a long period and a strong user acquisition funnel from payments. Its share of Indian digital payments, while less dominant than Walmart’s PhonePe and Google Pay, could remain stable, helping it reach its target of 500 million users. Regulatory problems are expected to ease with a new payments license, its bread and butter, with the segment margin set to increase through optimization of the system and its integrated offerings. Loans, insurance and advertising can catalyze sales for the Ant Financial-backed company.
-Nathan Naidu, analyst
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–With assistance from Vlad Savov.
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