Paytm Turns Payments Growth Into Profit
Updated: 13 minutes ago
Katrela Ventures Daily Update · Investment, M&A and Business Innovation Digest · 27 October 2026
Key takeaways
One97 Communications (Paytm) posted Q2 FY27 net profit of ₹225 crore versus ₹21 crore a year earlier; revenue rose 28.5% to ₹2,648 crore.
Tata Communications plans to invest $400–450 million in about 10,000 km of AI-ready fibre in India.
SoftBank's SVF II sold about 1.2% of Ola Electric, cutting its holding to 11.7%.
Funding: Cent raised $15 million, Matiks $10 million and BioStack $9.5 million.
Stay ahead with the latest funding rounds, strategic acquisitions, and groundbreaking innovations shaping the business world!
📩 #Read the full update below.
01. TOP STORIES
Tata Communications to Invest Up to $450 Million in AI-Ready Fibre Network: Tata Communications announced on 26 October that it plans to invest $400–450 million (₹3,806–4,282 crore approx.) to build about 10,000 km of new long-haul fibre linking data centres and AI hubs across India. The network will be rolled out in three phases, starting with the Mumbai–Pune–Hyderabad–Chennai corridor.
SoftBank Trims Ola Electric Stake to 11.7%: SoftBank's investment vehicle SVF II Ostrich (DE) LLC sold 5.55 crore shares of Ola Electric, about 1.2% of the company, through open-market transactions, cutting its holding to 11.7% from 12.9%, according to a disclosure reported on 27 October. It also sold 1.12 crore rights entitlements while Ola Electric's rights issue of about ₹1,000 crore, priced at ₹27 per share, is under way.
02. QUICK TAKES
Paytm Turns Payments Growth Into Profit
Ecosystem Scale: ₹2,648 Cr Q2 FY27 revenue | ₹225 Cr Q2 FY27 net profit | 28% YoY revenue growth | ₹1,434 Cr Q2 payments revenue | ₹912 Cr Q2 financial services | ₹270 Cr Q2 FY27 EBITDA
One97 Communications, which runs Paytm, reported a net profit of ₹225 crore for Q2 FY27 (July–September 2026) on 26 October, compared with ₹21 crore a year earlier and ₹220 crore in Q1 FY27. Revenue from operations rose 28.5% year-on-year to ₹2,648 crore from ₹2,061 crore, and 8% sequentially from ₹2,448 crore.
Payments remain the core of the business. Payment services revenue rose more than 25% to ₹1,434 crore, over 54% of operating revenue, while financial services distribution contributed ₹912 crore and marketing services ₹287 crore. Together, payments and financial services distribution accounted for about 89% of operating revenue. According to Upstox, EBITDA rose to ₹270 crore from ₹143 crore a year earlier, taking the margin to 10% from 7%.
Costs grew more slowly than revenue. Total expenditure rose about 23% to ₹2,531 crore from ₹2,062 crore. Payment processing charges, the largest single cost at about 32% of the total, rose 28% to ₹805 crore, employee benefit expenses rose over 14% to ₹759 crore, and marketing spend rose 59% to ₹194 crore. For the first half of FY27, operating revenue was ₹5,096 crore and net profit ₹491 crore.
The quarter matters for India's wider fintech sector. It shows a listed payments company generating operating profit from merchant payments and the distribution of loans and other financial products, rather than from cost cuts alone. For fintech founders and investors, it offers a public reference for how revenue mix, processing costs and distribution income combine at scale; Paytm's market capitalisation stood at ₹1,06,250 crore at Monday's close. Merchant lenders, payment aggregators and MSME-focused fintechs are likely to compare their own processing costs and distribution income against these figures.
The headline growth needs context. The year-ago quarter carried an exceptional expense of ₹190 crore, and Upstox puts profit growth adjusted for exceptional items at about 30%. Other income of ₹182 crore is equivalent to about 81% of the quarter's net profit, and profit rose only ₹5 crore from the previous quarter. Payment processing charges also grew in line with payments revenue, which limits how far scale alone can widen margins. Marketing spend, which grew faster than revenue, will also need to show returns in user and merchant growth.
Katrela's Take
➢The quarter signals that Indian payments platforms can now earn an operating profit when payments volume is paired with financial-product distribution. For fintech founders, investors and the MSME merchants these platforms serve, the useful lens is unit economics rather than headline profit growth. The metrics to watch are payment processing cost as a share of payments revenue, growth in financial services distribution, EBITDA excluding other income and the return on rising marketing spend. The opportunity is a clearer path to monetising merchant networks; the constraint is that thin payment margins leave profit sensitive to costs and regulation.
Can payments alone sustain fintech profits, or will distribution income now carry the model?
03. FUNDING BRIEF
Cent-a preventive healthcare startup founded by Practo co-founder Shashank ND-has raised $15 million (₹142.7 crore approx.) in a Series A round, including equity and debt, co-led by Blume Ventures and South Park Commons, with participation from Arun Sarin, Srinivas Narayanan and other angel investors; it has also acquired AI radiology platform Medsee.
Matiks-a Bengaluru-based social gaming platform for maths, memory, logic and puzzle games-has raised $10 million (₹95.2 crore approx.) in a pre-Series A round led by General Catalyst, with participation from Ronnie Screwvala, Info Edge Ventures, Tanglin Venture Partners and Untitled Ventures.
BioStack-a healthcare data infrastructure startup building training datasets for medical AI-has raised $9.5 million (₹90.4 crore approx.) in a seed round led by Peak XV Partners, Afore Capital and DCVC, with participation from Emerson Collective, SV Angel, Verdict Capital, Streamlined Ventures and Y Combinator.
Building in fintech or health-tech and preparing for your next round? Katrela runs investment-readiness reviews — DM us.
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Frequently asked questions
How did Paytm perform in Q2 FY27?
One97 Communications reported net profit of ₹225 crore, up from ₹21 crore a year earlier and ₹220 crore in Q1 FY27, on revenue from operations of ₹2,648 crore, up 28.5% year on year.
Can payments platforms in India be profitable?
Paytm's quarter suggests operating profit is possible when payments volume is paired with financial-product distribution, though thin payment margins leave profit sensitive to costs and regulation.
Which fintech metrics does Katrela Ventures recommend tracking?
Payment processing cost as a share of payments revenue, growth in financial services distribution, EBITDA excluding other income and the return on rising marketing spend.
This edition was first published in the Katrela Ventures Daily Update newsletter on LinkedIn. Subscribe to get the digest every morning.
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