Paytm shelves first bonus issue, posts 79% profit jump
Paytm withdrew its inaugural bonus share proposal as it reported a 79% jump in first-quarter profit, signaling a preference to preserve capital for subsidiary growth over immediate shareholder rewards.
Paytm’s board opted not to proceed with the digital payments firm's first-ever bonus issue "at this time", according to a July 20 stock exchange filing. The company noted it may revisit the proposal in the future. The reversal comes just five days after the firm informed exchanges that the board would consider a bonus issue alongside its quarterly earnings. Since its listing in November 2021, Paytm had never executed a bonus issue, nor had it specified a ratio or record date for this one.
The decision to withhold the bonus shares arrived alongside quarterly results that underscore the company's ongoing financial turnaround. Consolidated net profit for the June quarter reached Rs 220 crore, representing a 79% surge from Rs 123 crore in the same period last year. On a sequential basis, profitability improved from Rs 183 crore in the March quarter.
Operational revenue demonstrated sustained momentum, rising 28% year-on-year to Rs 2,448 crore, up from Rs 1,918 crore. Sequentially, revenue grew from Rs 2,264 crore in the preceding quarter. These figures build upon the company's reported transition to full-year profitability. For the fiscal year, Paytm posted a net profit of Rs 552 crore, reversing a loss of Rs 663 crore in the prior year. Annual revenue climbed 22% to Rs 8,437 crore.
Management attributed the annual revenue expansion to growth in its core payments business, a higher distribution of financial services, and stricter cost controls. Rather than distributing bonus shares—which are issued free of cost to existing shareholders and increase the total shares outstanding without changing an investor's ownership stake—Paytm is reallocating capital.
At the same July 20 meeting, the board approved an investment of up to Rs 100 crore in Paytm Money, its wholly owned subsidiary. The funds are specifically earmarked to strengthen technology infrastructure, meet regulatory capital requirements, and expand the subsidiary's investment and wealth management operations.
For market participants, the strategic pivot is clear. Despite generating its first full-year profit and accelerating quarterly earnings, Paytm is choosing to funnel capital into its wealth management ecosystem. The shelved bonus issue indicates management currently views internal growth investments as a higher priority than the improved stock liquidity and retail sentiment that typically accompany such corporate actions.
