Paytm UPI sops hit is just a blip

The Cabinet's approval of ₹1,500 crore incentives for FY25 to promote low-value unified payments interface (UPI) transactions is a disappointment for investors in One97 Communications Ltd stock—Paytm's parent.

- Manish Joshi

The stock has been in focus lately in anticipation of this development. Under this scheme, the total incentives for the UPI industry stood at ₹3,268 crore for FY24, up by nearly 80% over the previous year. Consequently, the bar for FY25 was high. Currently, there is no confirmation of the company's share in incentives and a concern is that it may decline drastically.

Paytm earned ₹288 crore under the scheme for FY24, which was accounted for in Q4FY24. This announcement usually comes during Q4 of the financial year.

As Paytm's market share in volume and value of UPI payments has come down since January 2024 when the Reserve Bank of India took action against Paytm Payments Bank and the government cut overall allocation, there could be a fall of about ₹150 crore in the company's income from UPI incentives for FY25.

For perspective, the company has reported a loss of ₹772 crore at adjusted Ebitda level (Ebitda before Esop) in 9MFY25.