Paytm arm gets RBI in-principle nod for prepaid payment instruments; stock reacts

One97 Communications Ltd, the parent company of Paytm, on Friday said its wholly-owned subsidiary, Paytm Payments Services Ltd (PPSL), has received in-principle authorisation from the Reserve Bank of India (RBI) to set up and operate a payment system for issuing and operating Prepaid Payment Instruments (PPIs) in India.

In a regulatory filing, the company said, "Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we wish to inform you that Paytm Payments Services Ltd (PPSL), a wholly owned subsidiary of One 97 Communications Ltd (the Company), has received a letter dated November 13, 2026 (Ref. No. CO.DPSS.AUTH.No.S860/02.27.004/2026-27) from the Reserve Bank of India (RBI), Department of Payment and Settlement Systems, granting PPSL an in-principle authorisation under the Payment and Settlement Systems Act, 2007, to set up and operate payment system for the issuance and operation of Prepaid Payment Instruments (PPIs) in India, subject to adherence to the RBI Master Directions on Prepaid Payment Instruments dated August 27, 2021, as updated from time to time."

Paytm mentioned that it had disclosed in its Q1 FY27 earnings release that PPSL had applied for a wallet licence.

"Post grant of Final Authorisation/Certificate of Authorisation, PPSL can offer pre-paid instruments, such as wallet, to its customers," the company also said.

Paytm shares were up 0.26 per cent at Rs 1,928.05 in Friday's trade following the announcement.

Paytm Q2 results

On the earnings front, Paytm reported a 28 per cent year-on-year (YoY) increase in revenue to Rs 2,648 crore for the September quarter (Q2 FY27). EBITDA rose 90 per cent YoY, with the EBITDA margin reaching 10 per cent, entering double digits for the first time. Net profit jumped nearly 10-fold to Rs 225 crore, the company said.

However, the company's contribution margin of 55.9 per cent declined 271 basis points (bps) YoY and fell short of Morgan Stanley's estimate of 57.7 per cent. Direct costs were 10 per cent higher than the brokerage's forecast.

While EBITDA was in line with Morgan Stanley's estimate, the EBITDA margin of 10.2 per cent missed its estimate of 10.7 per cent.

Brokerage call, target

Goldman Sachs recommended a 'Buy' rating on the stock with a target price of Rs 2,010. UBS maintained its 'Neutral' rating with a target price of Rs 1,340, while Morgan Stanley recommended 'Hold' with a target price of Rs 1,450.

Bernstein retained its 'Outperform' rating with a target price of Rs 2,200. Citi recommended 'Buy' with a target price of Rs 1,940, while Macquarie recommended 'Outperform' with a target price of Rs 2,025.