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Informist, Tuesday, May 5, 2026

By Krity Ambey

NEW DELHI – One 97 Communications Ltd. is expected to report a steady improvement in profitability in the March quarter, supported by growth in its financial services business and stable performance in payments. Analysts see the pace of loan distribution, contribution margins, and operating leverage as key areas to monitor.

The company is expected to report a net profit of INR 2.28 billion for the March quarter, according to an average of estimates from four brokerages. The projections range from INR 974 million to INR 2.88 billion. For the March quarter a year ago, the company had reported a loss of INR 5.40 billion because of an exceptional cost of INR 5.22 billion on cancellation of employee stock ownership and impairment related to a subsidiary. Adjusted for the exceptional cost, the financial technology company's loss for Jan-Mar 2025 was INR 177 million.

Sequentially, the company's bottom line is likely to rise 1.4% in the March quarter if it aligns with the consensus estimate. It is worth noting that the Paytm parent also incurred an extra expense of INR 120 million in the December quarter due to implementation of the new labour codes in November. But for this exceptional cost, the company's net profit for the December quarter would have been INR 2.37 billion, nearly 4% higher than the consensus estimate for Jan-Mar.

Motilal Oswal Financial Services Ltd., which has given the lowest estimate for net profit, has also projected largely flat on-quarter revenue. YES Securities (India) Ltd., which has the highest profit estimate, expects the company's revenue to grow 3.4% on quarter, thanks to gains in both the payments and financial services segments.

The company's net sales are expected to grow 19% on year to INR 22.80 billion, based on the average of estimates from four brokerages. Sequentially, the top line is seen up 4%. Three brokerages have also projected earnings before interest, taxes, depreciation, and amortisation in the range of INR 433 million to INR 2.34 billion for the March quarter. 

The brokerages expect loan distribution to remain a key growth driver, with Emkay Global Financial Services Ltd. forecasting continued strong momentum in the financial services segment. However, JM Financial Institutional Securities Pvt. Ltd. noted that while loan disbursal growth is likely to improve, revenue growth may be weighed down by a declining share of Default Loss Guarantee loans.

In the payments business, analysts expect steady growth driven by consumption trends. However, payment revenues may see some volatility due to the timing related to the inflow of incentives under the Payments Infrastructure Development Fund Scheme. The fund has been set up by the Reserve Bank of India to boost the adoption of digital payments in underserved areas of the country. Under the scheme, companies get subsidies for deploying digital payment devices in small towns.

Contribution margins are expected to remain broadly stable, with most brokerages pegging them in the mid-50% range, even as the company steps up marketing expenditure to drive user and merchant acquisition. The company had reported a contribution margin of 56% in Jan-Mar 2025 and 57% in the December quarter. However, operating leverage is expected to improve, supported by relatively controlled fixed costs, JM Financial said. 

Overall, the March quarter is expected to reflect continued progress towards sustainable profitability, with the focus on scaling financial services, maintaining margin discipline, and sustaining operating leverage, analysts said. But the March quarter is also likely to be the last steady earnings period before the company experiences the fallout of the cancellation by the RBI of the licence of Paytm Payments Bank. The company, whose share price has fallen nearly 3% since the RBI action, has ended operations of its payments bank.

The One 97 Communications stock, which has fallen more than 4% since it released its December quarter results on Jan. 29, closed nearly 2% higher Monday at INR 1,115.80 on the National Stock Exchange. Of the seven research reports on the company available with Informist, six have a "buy" recommendation with an average target price of INR 1,612, nearly 45% higher than the current price. Only one brokerage has a "hold" recommendation with a target price of INR 1,200.

Following are the March quarter earnings estimates, in INR million, for One 97 Communications from four brokerages in descending order of the net profit estimate:

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Edited by Rajeev Pai

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