Paytm share price falls over 1% despite strong Q1 results 2026: Should you buy, sell or hold?

Paytm Q1 Results 2026: One97 Communications, the parent company of Paytm, stock fell 1.4% to ₹1,328.80 in intraday deals on Tuesday, July 21, even after it reported a strong financial performance for the quarter ended June 2026 (Q1 FY27) after market hours on Monday, as sustained momentum across its core businesses led to a sharp rise in profitability.

The decline comes after the board rejected the bonus issue proposal as well as the cautious stance of global brokerage house CLSA.

The company posted a net profit of ₹220 crore for the quarter, marking a 79% increase from ₹123 crore reported in the corresponding period last year. Excluding the impact of the PIDF incentive, comparable profit after tax (PAT) surged 207% to ₹212 crore from ₹69 crore a year earlier.

The earnings growth was supported by strong operating leverage, healthy expansion in the company's high-margin payments and financial services businesses, and improved cost efficiencies, with revenue growing at a faster pace than operating expenses.

Alongside its June quarter earnings, the Board also considered a proposal to issue bonus shares. However, it decided not to proceed with the proposal at this stage. The Board said it remains committed to compounding growth and profitability to deliver long-term shareholder value and, after due deliberation, concluded that prioritising business growth is in the best interests of shareholders.

Other Q1 Highlights

Revenue from operations increased 28% year-on-year to ₹2,448 crore from ₹1,918 crore in the corresponding quarter of the previous year. On a sequential basis, revenue rose 8% from ₹2,264 crore reported in the March quarter.

The growth was primarily driven by the company's Payment Services business, where revenue climbed 33% YoY to ₹1,384 crore, supported by higher merchant payment volumes and the continued expansion of its payments ecosystem.

The company's profitability improved sharply during the quarter, with the company reporting its highest-ever EBITDA, surging 182% year-on-year to ₹203 crore from ₹72 crore in the corresponding period last year. The EBITDA margin also expanded to 8% from 4%.

Excluding the impact of the government's PIDF incentive, comparable EBITDA rose to ₹195 crore from ₹18 crore a year ago, while the comparable EBITDA margin improved significantly to 8% from 1%.

The company said its Gross Merchandise Value (GMV) growth accelerated to 31% year-on-year in Q1 FY27, compared with 27% in Q4 FY26 and 24% in Q3 FY26.

According to the company, the improvement was driven by continued investments in products, merchant distribution, and servicing of device merchants. It also said it has started witnessing strong momentum in its online merchant business following the receipt of the online Payment Aggregator (PA) licence last year.

Paytm share performance

The stock has been in the green in recent times, rising 24% in 1 month, 16% in 3 months, over 9% in 6 months and around 33% in the last 1 year. It had hit its 52-week high of ₹1,407 earlier this month on July 15; meanwhile, it touched its 52-week low of ₹947.10 in March 2026.

Should you buy?

Brokerages remained divided on Paytm despite the company's strong June quarter performance, with some seeing further upside on improving fundamentals, while others cautioned that the recent rally has already factored in much of the optimism. Media reports indicated that while Citi turned more optimistic by raising its target price, CLSA continued to maintain a cautious stance, citing limited upside at current valuations.

As per reports, CLSA retained its 'Underperform' rating on Paytm with a target price of ₹1,050, implying a downside of about 22%. The brokerage said the company's EBITDA of ₹200 crore was slightly ahead of its estimate of ₹190 crore, aided by stable contribution margins and lower fixed costs.

The brokerage revised its FY27-FY29 EBITDA estimates lower by 2-3%, saying operating expenses had benefited from lower doubtful debt provisions during the quarter but are expected to increase going forward.

It further said Paytm Payment Services has applied for a wallet licence. However, it believes the stock's recent rally, driven by expectations of the return of UPI MDR, leaves limited room for further gains even if such a policy is eventually implemented.

Citi, on the other hand, reiterated its 'Buy' rating and raised its target price to ₹1,560 per share, implying an upside of about 15.8% from Monday's closing price, media reports said. The brokerage noted that Paytm's Q1 EBITDA of ₹200 crore exceeded its estimate by 16%, supported by lower cloud costs and stronger merchant loan distribution, although payment margins remained under pressure due to device rentals.

It also said that the introduction of a 5-7 basis point merchant discount rate (MDR) on large UPI merchants could improve net payment margins by 0.5-1 basis point and increase its FY28 EBITDA estimates by 8-10%, if implemented.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.