Paytm Gets NPCI Approval to Onboard New UPI Users

After months of waiting, One 97 Communications, Paytm’s parent company, has received the go-ahead from the National Payments Corporation of India (NPCI) to start onboarding new UPI users again. This approval, given on October 22, 2024, is a turning point for Paytm, which had hit a roadblock earlier this year when the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank Ltd (PPBL). The RBI’s freeze meant no new UPI users could join via Paytm after March 15, 2024, citing concerns around risk management.

What’s Changing for Paytm?

With NPCI’s approval, Paytm is back in the game. The company can now onboard new UPI users under a multi-bank model, partnering with four major banks—Axis Bank, HDFC Bank, State Bank of India, and YES Bank. YES Bank, in particular, will also serve as a key merchant acquiring bank for Paytm, helping to manage payments for businesses.

Market Reacts to the News

Naturally, the market loved this update. Paytm’s stock jumped 11.01% today, reaching Rs.768 at its highest point. While it’s still down 19.28% over the past year, it’s up 15.41% so far this year, showing signs of a comeback. This comes as a welcome relief for the company, which had seen slower user growth during the RBI’s regulatory pause. 

Strong Quarter Adds to the Win

Paytm reported strong Q2FY25 results, with revenue at Rs.1,660 Cr, up 11% QoQ. Key growth drivers included Payment Services, contributing Rs.981 Cr (up 9% QoQ), and Financial Services, adding Rs.376 Cr (up 34% QoQ). The contribution margin rose to 54%, yielding a profit of Rs.894 Cr (up 18% QoQ). EBITDA improved to Rs.404 Cr, reflecting a Rs.389 Cr QoQ boost. A one-time gain from the sale of the entertainment ticketing business led to a PAT of Rs.930 Cr.

Conclusion: With NPCI’s green light, Paytm can now focus on expanding its user base again. Between the new approval and solid quarterly results, it looks like the company is on track for a good comeback in the digital payments space.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.