Summary
One 97 Communications Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026, 8:00 AM IST
Event Participants
Executives 3 Anuj Mithal (SVP, Investor Relations), Madhur Deora (President and Group CFO), Vijay Shekhar Sharma (Founder and CEO)
Analysts 10 Jayant Kharote (Axis Capital), Jigar Valia (Ohm Group), Manish Adukia (Goldman Sachs), Param Subramanian (Investec), Piran Engineer (CLSA), Pranav Gundlapalle (Bernstein), Pranav Kshatriya (Emkay), Rahul Jain (Dolat Capital), Sachin Dixit (JM Financial), Sachin Salgaonkar (Bank of America)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹2,850 crores (approx) | +20% YoY (+25% on like-for-like basis); growth driven by merchant subscriptions and financial services. |
| Contribution Margin | 57% | Management guides to “mid-50s” in the near term due to PIDF impact, but seeks to offset via subscription hikes. |
| Net Payment Margin | 4+ bps | +1 bps improvement; driven by RuPay on UPI, EMI products, and favorable instrument mix. |
| Subscription Merchants | 1.44 crores | +27 lakh devices added YoY; focus remains on monetizable merchants over pure QR deployments. |
| Consumer UPI GMV | ₹5.1 trillion | Includes both P2P and P2M; management focusing on technology-led market share gains. |
| BNPL Customers | 1 lakh+ | Reached within 3 months of launch; trajectory faster than previous “Postpaid” iteration. |
| Merchant Loans | ~10 lakh active | 7% penetration of device base; ticket sizes growing ~15% CAGR due to repeat behavior. |
Geographic & Segment Commentary
- Payment Services: Management is focusing on “merchants that matter,” transitioning away from free QR deployments toward subscription-based devices. The company recently received licenses (PPSL) to re-enter the online merchant onboarding market, which is expected to boost margins via platform fees and enterprise-led commerce.
- Financial Services: Merchant lending remains the primary growth engine due to stable asset quality and high repeat rates. Consumer credit is being rebuilt around a “Buy Now, Pay Later” (BNPL) model, which crossed 100k customers in three months, moving away from pure traffic-led distribution of personal loans.
- Marketing & Commerce Services: Segment has “bottomed out” after headwinds in real-money gaming and travel. Early AI-led products like “Paytm Check-in” are seeing 30% conversion rates on travel queries, significantly higher than traditional OTA benchmarks.
Company-Specific & Strategic Commentary
- PIDF Discontinuation Impact: The removal of the Payment Infrastructure Development Fund (PIDF) subsidy created a ₹80 crore revenue gap. Management expects to offset 30-40% of this in Q4 FY26 through higher merchant subscription fees and targeted AI-led sales efforts.
- AI Transformation: All sales planning and cost optimization are now AI-led. Management showcased internal benchmarks where their enterprise AI models outrank ByteDance and Alibaba in real-world use cases, aiming to reduce “deadwood” costs while expanding technical moats.
- Product Relaunch: Management committed to bringing the “Wallet” product back to the platform for consumer completeness, though they noted it is less central to the industry now than it was three years ago.
- Wealth Management: Aiming to make Paytm Money a top-five player within three years. Focus is shifting toward Margin Trading Funding (MTF) and high-volume, low-margin digital gold sales to drive retention.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | >30% (Long-term) | Management maintains long-term trajectory despite current conservative cycle in consumer credit. |
| EBITDA Margin | 15-20% (Target) | Path remains intact; operating leverage expected to kick in as indirect costs are optimized via AI. |
| BNPL Disbursement | ₹100 crores/month | Expected to be reached within six months of the product’s recent relaunch. |
| Cash Generation | Free Cash Generating | Strategic shift from customer acquisition at any cost to building a “free cash generating machine.” |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory/MDR Chatter | Potential changes in UPI MDR or regulatory subventions (like PIDF) create revenue volatility. Management is pricing for a no-MDR scenario but notes acquiring-side margins remain healthy. |
| Consumer Credit Cycle | Personal loans and credit cards remain “challenged” due to an extended credit cycle. The company has slowed distribution in these areas to protect partner asset quality. |
| Operational Margin | Near-term EBITDA will take a hit (~60% of the PIDF impact) in Q4 FY26 before subscription offsets fully materialize in subsequent quarters. |
Q&A Highlights
PIDF and Contribution Margins
- Question: Why will contribution margin (CM) drop to mid-50s if you can offset the PIDF impact? (Manish Adukia)
- Answer: Mid-50s is a conservative floor. If offsets come via subscriptions, CM stays stable; if they come via lower sales costs (indirects), CM may dip while EBITDA remains protected (Madhur Deora).
Credit Product Strategy
- Question: Where are you on the BNPL and Wallet relaunch? (Manish Adukia)
- Answer: BNPL is crossing ₹100cr monthly disbursement soon. Wallet will return for “completeness” but isn’t expected to return to its ₹500cr profitability peak of 2024 (Vijay Shekhar Sharma/Madhur Deora).
Cost Structure and AI
- Question: Costs have been flat for 5 quarters; is there a risk of underinvestment? (Pranav Gundlapalle)
- Answer: Sales employee costs are at an all-time high. We are “removing deadwood” and using AI to optimize indirects, allowing us to reinvest in the core without increasing the total cost base (Vijay Shekhar Sharma).
Merchant Loan Penetration
- Question: What is the ceiling for merchant loan penetration? (Rahul Jain)
- Answer: Currently 7% of 1.44cr devices. Whitelist base is 40-50%, so penetration could realistically hit 20% over time as repeat behavior matures (Madhur Deora).
Key Takeaway
Paytm delivered a quarter of stabilization and strategic pivoting, characterized by 25% like-for-like revenue growth and a meaningful expansion of payment processing margins to over 4 bps. The company is aggressively recalibrating its merchant business following the end of PIDF subsidies, utilizing AI-driven sales models to transition merchants to higher subscription tiers. Strategically, the focus has shifted from “vanity metrics” to building a moat around payment-led credit (BNPL and Merchant Loans) and high-margin online acquiring, now that PPSL licenses are secured. While the consumer credit cycle remains cautious, management expressed high confidence in reaching a 15-20% EBITDA margin target through massive operating leverage and AI-led productivity gains. The firm remains positioned as a technology-first player aiming to monetize 250 million high-quality Indian consumers while expanding its dominant 1.44 crore device-led merchant base.
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