Paytm becomes majority Indian-owned and controlled company

One 97 Communications Ltd, which operates the Paytm brand, has become a majority Indian-owned and controlled company after domestic investors increased their stake to 50.3% as of March-end 2026.

The shift marks a structural change in ownership for the fintech firm, with domestic shareholding rising steadily in recent quarters, reflecting growing investor confidence.

Domestic institutional investors raised their stake to a record 23.1% in the March quarter, up 2.8 percentage points sequentially and 9.1 percentage points from a year earlier, according to regulatory filings.

Mutual funds led the increase, with their holdings climbing to 16.6% from 14.3% in the previous quarter, while the number of funds investing in the company rose to 41 from 36, with entities, such as Motilal Oswal Mutual Fund, Mirae Asset and Bandhan Mutual Fund, continuing to expand their shareholding.

Insurance companies also added to their positions, taking their combined stake to 5.1% from about 4.8% earlier, with players, such as Tata AIA Life Insurance and SBI Life Insurance, among those, increasing exposure.

The rise in domestic ownership comes alongside an improvement in operating performance. The company reported its third consecutive profitable quarter in the December quarter, posting a net profit of Rs 225 crore, while revenue rose 20% year-on-year to Rs 2,194 crore.

EBITDA stood at Rs 156 crore, with margins at 7%. The company's merchant base also continued to expand, with subscription merchants crossing 1.44 crore, up 24% over the year.

Brokerages have noted improving fundamentals, with Bank of America upgrading the stock, citing stronger monetisation and profitability, particularly in merchant payments and lending. Bernstein also highlighted the company's revenue advantage in the merchant business and maintained a positive view on its earnings trajectory.

BofA recently upgraded Paytm, citing its leadership in higher-monetisation segments and improving profitability trajectory.

The brokerage said Paytm is "strong in B2B" and "is ahead in its monetisation journey with a more diversified business mix and better margins," driven by strength in merchant payments and lending. It maintained a 'Buy' rating on favourable risk-reward with a Rs 1,380 target price.

Bernstein also highlighted Paytm's monetisation advantage, noting that its merchant revenues are roughly twice that of its nearest competitor despite similar merchant payment volumes, and said the company is further along the profitability curve. It has ascribed an outperform rating to the stock.

A notable implication of the rising domestic ownership is the potential reduction in regulatory overhang that had previously weighed on the company, especially amid tighter scrutiny of foreign investments in India’s fintech sector. A more locally anchored shareholder base may provide greater strategic flexibility and alignment with evolving regulatory expectations.

Additionally, the shift in investor composition could lead to improved market stability in the stock, as domestic institutional investors—particularly mutual funds and insurers—tend to have longer investment horizons compared to foreign portfolio investors, which are often more sensitive to global liquidity cycles.

Paytm’s continued focus on high-margin segments such as merchant subscriptions, device monetisation, and financial services distribution indicates a deliberate pivot away from its earlier cash-burn-heavy growth model. This transition reflects a broader maturation of India’s fintech ecosystem, where profitability and unit economics are increasingly prioritised over pure user acquisition.

(With inputs from PTI.)