Paytm sees strong user trust and high merchant stickiness post PPBL action

Brokerage firms tracking the company said the RBI action on PPBL has limited direct impact on Paytm's core business operations, given the structural separation between the listed entity and the payments bank.

In Short

• Paytm core operations run smoothly post RBI action on Paytm Payments Bank Ltd
• No material impact on business due to earlier separation from payments bank
• Merchant ecosystem and device subscriptions steadily increasing quarter-on-quarter

India’s leading UPI payments app, Paytm, continues to operate without any disruption across core operations following the Reserve Bank of India’s (RBI) action on Paytm Payments Bank Ltd. (PPBL), with brokerage firms indicating no material impact on its business and pointing to the company’s earlier separation of its core operations from the banking entity as a major factor supporting management credibility.

In its disclosure to the exchanges last week, Paytm (One 97 Communications Ltd.) said its services continue to operate normally for users and merchants, and reiterated that it has no material business arrangements with the payments bank, and no board or management overlap with PPBL, stating that the latter operates independently.

The company had also earlier impaired its investment in PPBL as of March 31, 2024, and stated there is no direct financial impact on its business, reinforcing strong governance and investor confidence.

Brokerage firms tracking the company said the RBI action on PPBL has limited direct impact on Paytm’s core business operations, given the structural separation between the listed entity and the payments bank, which they say supports confidence in the business and its compliance framework, and addresses concerns around Paytm trust following the regulatory action.

According to a report by Emkay Global Financial Services, the impact on Paytm is negligible as the company had already terminated its commercial agreements with PPBL and fully impaired its equity investment by March 2024. The brokerage said Paytm is “legally ring-fenced” from the payments bank entity. It also noted that the RBI granting a final Payment Aggregator licence to Paytm in November 2025 reflects regulatory comfort with the listed entity. This clarity is reflected in other analyst conclusions.

Bernstein says there is “unlikely to be any impact on the company’s numbers,” given the clear separation between PPBL and Paytm. On the other hand, Investec also notes that PPBL does not have any business relationship with One 97 since March 2024.

Following the regulatory action, markets continued to show strong investor confidence and trust in the stock, as analysts said Paytm’s growth trajectory remains intact, with limited impact on its core business.

Paytm shares declined 8.38 per cent to Rs 1,051.10 in early trade on the NSE on Monday but later recovered to settle at Rs 1,137.80, down 0.83 per cent, trimming most of the day’s losses.

User, merchant engagement signals continued trust in Paytm.

User, merchant engagement signals continued trust in Paytm

User and merchant engagement on Paytm has remained resilient following the regulatory action on Paytm Payments Bank Ltd. (PPBL) in 2024, with subsequent quarters showing steady expansion across key operating metrics.

The company’s merchant ecosystem has continued to scale, with device subscriptions rising from 1.30 crore in Q1 to 1.37 crore in Q2 and 1.44 crore in Q3, creating a larger base of recurring revenue through devices and services. Net payment revenue also grew sequentially, reflecting improving monetisation from its merchant base.

On the consumer side, monthly transacting users reached 7.6 crore, while consumer UPI GMV grew 35 per cent over the last nine months of FY26, compared with industry growth of 16 per cent, indicating sustained engagement and retention.

Brokerage firm Goldman Sachs, citing NPCI data, noted that Paytm’s UPI market share by value increased to 6.5 per cent in March 2026, up from 6.2 per cent in December 2025 and 5.4 per cent a year earlier.

The company’s financial services distribution business has also scaled, with revenue rising from Rs 561 crore in Q1 to Rs 611 crore in Q2 and Rs 672 crore in Q3, supporting overall monetisation.

Analysts said the continued growth across merchant, consumer and financial services segments since the 2024 regulatory action reflects sustained user trust and merchant confidence in the platform, even as the PPBL-related developments remain specific to the banking entity.

- Ends