Shares of Paytm were trading nearly 4% higher in early trade on Wednesday, even though the company reported a sharp drop in profit for the second quarter of FY26.
At 10.03 am, the stock was up 3.98% at Rs 1,318.50 on the Bombay Stock Exchange.
One 97 Communications, Paytm’s parent company, posted a net profit of Rs 21 crore for the July to September period. This is far lower than the Rs 939 crore profit recorded a year ago.
The base was unusually high last year because of a one-time gain of Rs 1,345 crore from the sale of its movie ticketing and events business to Zomato.
Despite the decline in headline profit, operational performance remained strong. Revenue from core business rose 24 percent to Rs 2,061 crore compared to Rs 1,659 crore in the same quarter last year.
Total expenses fell 8.15% to Rs 2,062 crore from Rs 2,245 crore as the company continued to optimise costs and drive efficiencies.
The earnings received a one-time hit from a Rs 190 crore impairment loss related to a loan given to its online gaming joint venture First Games Technology Private Limited.
After the Promotion and Regulation of Online Gaming Act 2025 came into force and prohibited online gaming, the company wrote down the full carrying value of the joint venture to zero.
The stock reaction indicates that investors are choosing to focus on the improvement in Paytm’s underlying business rather than the exceptional items affecting profit comparisons.
Sentiment has also been supported by the company’s addition to global benchmark indexes. Global index provider MSCI has announced that Paytm will enter its Global Standard Indexes with effect from November 24.
This is expected to attract foreign investment as index-linked passive funds adjust their portfolios. Analysts estimate that the inclusion of Paytm along with three other Indian companies could lead to inflows of roughly 1.46 billion dollars into the domestic market.
Although the fintech company continues to navigate challenges on the regulatory front, investors appear encouraged by its improving financial performance and the credibility boost from its MSCI inclusion.
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