New Delhi [India], June 4 (ANI): Paytm's parent company, One 97 Communications, has staged a sharp turnaround in FY26, with sustained profitability, AI-led operating efficiencies and improving business fundamentals driving a significant shift in market sentiment towards the stock.

A few fiscals ago, the street's conversation around One 97 Communications, parent of digital payments pioneer Paytm, was centered around its ability to maneuver through regulatory transitions, competitive intensity and the path to profitability. Following its FY26 results, the narrative seems to have dramatically shifted as the company reported a full year of profitability, with strong market share gains, signalling a year of disciplined compounding.

The combination of sustained profitability and strong operating performance has been reflected in the sentiment for analysts on the Paytm stock, with eight of the ten brokerages tracking the company now maintaining Buy ratings on the stock, while the remaining two have Neutral recommendations and none carry a Sell rating. Post the company announcing the results, the stock rallied over 6% the next day, reinforcing the bullish sentiment that the market carries. The rally in the Paytm share price after the FY26 earnings announcement also reflected improving investor confidence around the company's profitability trajectory and long-term growth outlook.

The headline numbers do most of the talking. Operating revenue for FY26 came in at Rs 8,437 crore, up 22 per cent YoY. EBITDA flipped from a loss of Rs 1,506 crore in FY25 to a positive Rs 502 crore. PAT landed at Rs 552 crore against a loss of Rs 663 crore last year, a Rs 1,215 crore swing. The company closed the year with a cash balance at Rs 13,315 crore, its highest as a listed entity.

The Street has noticed. Goldman Sachs called it a 'Q4FY26 beat with strong forward outlook,' maintaining Buy with a 12-month price target of Rs 1,400 target. Jefferies described revenue momentum as 'covering up for missing UPI incentives' and reiterated Buy at Rs 1,350. Bernstein went further, citing 'non-linear EBITDA expansion of roughly 10x over FY26-30E' and tagging it Outperform with a Rs 1,500 target. JM Financial, YES Securities, Citi and Macquarie have stayed constructive too, with targets clustering in the Rs 1,265-1,500 band. Even firms that remain on the sidelines concede that core payment margins are growing higher than estimates and distribution momentum remains strong.

Paytm's stock (One 97 Communications) has surged over 275 per cent from its all-time low of Rs 310 in February 2024 to a 52-week peak of Rs 1,175 in December 2025. The dramatic jump was driven by the company's structural turnaround, culminating in its maiden annual net profit of Rs 552 crore for FY26.

The underlying business is where the story gets interesting. Merchant GMV grew 27 per cent YoY to Rs 6.5 lakh crore, with consumer UPI gross transaction value expanding at more than double industry growth. Payment processing margins crossed 4 basis points, ahead of the company's earlier guidance of 3 basis points, driven by a richer mix of MDR-bearing instruments, including credit-on-UPI and EMI offerings.

Merchant subscriptions reached 1.51 crore, with 27 lakh net devices added during the year. The distribution-of-financial-services engine scaled to Rs 2,593 crore, up 52 per cent YoY, with repeat borrowers now accounting for more than half of merchant loan disbursements.

What's quietly powering profitability is also its AI-led operating leverage, which is reflected in cost optimisation. Total indirect expenses fell 16 per cent year-on-year to Rs 4,358 crore in FY26 from Rs 5,184 crore a year earlier, despite continued investments in artificial intelligence, technology infrastructure and financial services distribution expansion.

Management has been explicit that AI is now embedded across engineering, merchant servicing, fraud detection, collections and consumer personalisation. The Paytm Soundbox, deployed at 1.51 crore storefronts, is being repositioned as a small-business operating system rather than a payment-confirmation device. Coding agents and agentic workflows are compressing software delivery cycles. The result, revenue and contribution profit are now designed to grow meaningfully faster than fixed costs.

The forward guide is where management has staked its credibility. Paytm has explicitly signalled that FY27 revenue growth will exceed the 22 per cent delivered in FY26, with indirect expenses growing 'meaningfully slower' than revenue, a configuration that makes margin expansion mathematically embedded. Four compounding engines will continue to be at work in FY27, including merchant payments share gains, structural growth in merchant loan distribution, consumer lifecycle monetisation across credit and wealth, and AI-driven operating leverage. The aspirational 15-20 per cent EBITDA margin band has been reiterated, targeted within 2.5-3 years.

Beyond the numbers, there's a quieter signal worth reading. The company has discontinued the use of 'adjusted' metrics and moved to a more conservative revenue recognition policy. Regulatory transitions, the rent-on-credit-card stoppage, and the Real Money Gaming Act have washed through with negligible impact, a function of proactive compliance choices made well in advance. The Paytm Payments Bank licence cancellation, long an overhang, has been confirmed to have zero business or financial impact, with the investment already fully impaired back in March 2024.

For a company that spent two years being defined by its problems, the FY26 print is something different, a business defined by its execution. The thesis has been rebuilt quietly, methodically, in plain sight, with market participants showcasing their confidence in the Paytm stock price trajectory following the company's profitability turnaround. (ANI)