India’s fintech giant Paytm is gearing up for a pivotal year ahead. After a challenging FY25 marked by regulatory hurdles, a significant net loss, and stiff competition, the company is resetting its strategy for FY26 with a clear focus: return to its payments roots, double down on technology, and explore global opportunities.
Q4 FY25: Losses, But Signs of a Turnaround
Paytm reported a net loss of INR 544.6 crore in Q4 FY25, largely due to an exceptional loss of INR 522 crore. Stripping out this one-time hit, the loss before tax was just INR 19.9 crore-a dramatic improvement from the INR 550.5 crore loss in the same quarter last year. Revenue for the quarter grew modestly by 5% to INR 1,911.5 crore, while full-year revenue jumped 31% to INR 6,900.4 crore.
Despite these numbers, CEO Vijay Shekhar Sharma remains optimistic, predicting profitability as early as Q1 FY26. The company’s share price responded positively, surging over 9% after the results, with analysts maintaining bullish outlooks.
Moving Away from the Super App Dream
Refocusing on Core Payments
Paytm is shelving its ambition to be India’s “super app”-a one-stop shop for everything from entertainment to insurance. Instead, it’s streamlining its app to put digital payments front and centre. Sharma admitted that the previous “cluttered” approach diluted user experience and stretched resources thin, especially as regulatory challenges forced Paytm to shed various business lines like Paytm Insider and Paytm Ecommerce.
The shift is already showing results: monthly transacting users (MTUs) rose to 7.2 crore in Q4 FY25, up from 7 crore in the previous quarter. This growth was fuelled by the resumption of new UPI customer onboarding after the NPCI’s nod in October 2024, following months of restrictions by the RBI.
Digital Wallets: A Possible Comeback
While Paytm’s wallet business stalled due to regulatory action on Paytm Payments Bank, Sharma hinted at a potential breakthrough. The company is exploring multiple options to revive its digital wallet offerings, which could further strengthen its payments ecosystem.
Doubling Down on Technology and Product Innovation
Competing in a Crowded UPI Market
Paytm’s UPI market share has halved from 14.1% in 2023 to 7.03% in 2024, as rivals like PhonePe, Google Pay, Navi, and super.money ramped up their game. Rather than chasing market share with aggressive marketing, Paytm is betting on product depth and tech-led engagement. Features like hiding transactions in the passbook are examples of nuanced improvements aimed at enhancing user experience.
Sharma’s goal is ambitious: attract 200 to 250 million active users by focusing on high-value, engaged customers rather than just volume.
Merchant Loans: The New Growth Engine
While consumer lending has taken a hit due to regulatory constraints-leading to a pause in Paytm Postpaid and a drop in personal loan disbursals-merchant loans are on the rise. In Q4 FY25, merchant loan distribution soared to INR 4,315 crore, up from INR 1,671 crore a year ago. Repeat borrowers now account for 50% of loans, reflecting strong customer retention.
Global Expansion: Taking Indian Fintech to the World
Paytm is setting its sights beyond India, establishing subsidiaries in the UAE, Saudi Arabia, and Singapore. However, rather than launching the Paytm app overseas, the company aims to export its technology stack through strategic partnerships, helping local players build their own digital payments solutions.
Sharma clarified, “Internationalisation is not about launching the Paytm app in other markets. It’s about helping local players build their own solutions using our tech.” This approach allows Paytm to tap into global markets with minimal risk and investment.
Investor Sentiment: Optimism Returns
With a renewed focus and signs of operational improvement, investor confidence is rebounding. JM Financial and Emkay Global have both given ‘Buy’ ratings to Paytm stock, with price targets of INR 1,070 and INR 1,050 respectively-implying a potential upside of over 30% from current levels.
What Lies Ahead for Paytm?
Profitability in Sight: The company expects to turn profitable in Q1 FY26, a milestone that could restore faith among stakeholders.
Payments at the Core: Streamlined offerings and a focus on user experience are expected to drive engagement and growth.
Tech-Driven Growth: Investment in technology and product innovation will be key to differentiating Paytm in a crowded market.
Selective Lending: Merchant loans will be prioritised over consumer loans, aligning with regulatory realities and market demand.
Global Tech Partnerships: International expansion will focus on B2B tech exports, not direct consumer play.
In summary: Paytm is entering FY26 with a sharper, more focused strategy. By returning to its payments-first DNA, investing in technology, and exploring global tech partnerships, Paytm is aiming for sustainable growth and profitability-setting the stage for a new chapter in its journey as India’s fintech trailblazer.