Paytm Q1 profit surges 79% on cost cuts, rejects bonus issue
Paytm reported a 79% jump in first-quarter profit to Rs 220 crore, driven by operational leverage and falling technology costs, as its board opted to invest capital into its brokerage arm rather than issue bonus shares.
Paytm’s first-quarter profit surged 79% year-on-year to Rs 220 crore, propelled by steady revenue growth and strict control over technology overhead. The Indian digital payments firm posted revenue from operations of Rs 2,448 crore, representing a 28% increase from the same period last year and an 8% sequential improvement from the March quarter.
Profit before tax reached Rs 247 crore, up from Rs 143 crore a year earlier and Rs 173 crore in the preceding quarter. This operating performance highlights that the company is scaling efficiently. Total income for the period stood at Rs 2,630 crore, a 22% year-on-year increase.
Management achieved these improved margins by squeezing technology costs. Software, cloud, and data centre expenses fell to Rs 159 crore from Rs 168 crore a year ago and Rs 175 crore in the previous quarter. Depreciation and amortisation costs also dropped, declining to Rs 131 crore from Rs 166 crore in the prior year. However, other expenses crept up to Rs 381 crore from Rs 355 crore a year earlier, indicating rising administrative or promotional costs that partially offset the technology savings.
Alongside the earnings release, Paytm’s board made a notable capital allocation decision by rejecting a bonus share proposal. "After evaluating the proposal from the perspective of long-term shareholder value and due deliberation, the Board was of the view that the company should continue to focus on further compounding growth and profitability for shareholder value creation. Accordingly, the Board decided not to proceed with the said proposal at this time," the company said.
Rather than altering its equity structure, the board approved a Rs 100 crore investment in Paytm Money by subscribing to equity shares in the wholly owned brokerage subsidiary. This signals a strategic choice to deepen its financial services ecosystem.
For market participants, the results underscore Paytm’s ongoing transition toward sustainable profitability. The decision to direct capital into Paytm Money explicitly ties shareholder returns to the expansion of its wealth management arm. It reflects a preference for investing in fundamental business growth over corporate actions that distribute shares but do not alter the underlying valuation of the firm.
