Paytm Bets On AI Makeover To Drive FY27 Momentum

After its first full year of profitability in FY26, Paytm is now turning its attention to AI. During the fintech major’s Q4 FY26 earnings call, CEO Vijay Shekhar Sharma said that the company will be looking at inorganic growth going forward, but will limit all new investments to the AI space. 

With a cash balance of ₹13,315 Cr at the end of March 2026, the fintech major is lining up plans to shore up investments in the emerging space. Speaking in depth about its AI investment vision, Sharma made it clear that the company would not be looking at building its own data centre. Instead, plans to rent out the data centre and run its model on top of it.

“There is enough capex (capital expenditure) in the US… (But) We do believe there is an opportunity for us to invest in AI, equal to let’s say we are using agents for our customers. We can rent a data centre somewhere and then run our own model on top of it,” he added.

On top of this, the company plans to automate all services across its platform, from Paytm Money to Paytm Check-In, for both end consumers as well as merchants.

But where is Paytm currently deploying AI? In its investor presentation for Q4, Paytm said that it is deploying AI throughout the organisation by building applied models for Paytm-specific tasks such as payments intelligence, fraud prevention, merchant onboarding and collection. 

Paytm also said it has embedded AI agents across engineering functions including coding, reviews, testing and deployment, helping compress software development timelines and allied costs. The company also claimed that its AI-powered fraud detection and collections routing engine also contributed to its FY26 profitability turnaround.

For merchants, Paytm has integrated AI into its Soundbox devices, enabling business insights, customer notifications and merchant support. On the consumer side, the company said AI is helping acquire higher-quality users at lower costs while driving greater monetisation through personalisation.

Its travel ticketing platform, Paytm Check-in, is also experimenting with agentic interfaces to test consumer compatibility with the emerging technology. “This is our dip test on how Indian consumers are okay with an agentic interface. I see the agentic interface as a rejuvenated new opportunity for Paytm to gain consumer shares dramatically, in a number of categories. And this is our experiment category,” Sharma added.

He also highlighted that the funnel conversion on agentic is 7X to 8X more when compared to a normal interface.

“I feel lucky that we did not dump a lot of money earlier, because in the AI world, everything resets. So we see it as an opportunity to bring some product that is materially metaphor from now to 2030… What worked in 2020 is not going to work in 2030. So, anybody (rivals) that is not investing in AI is an opportunity for us – that person’s customer,” Sharma said.

The PPBL Overhang 

During the earnings call, the company restricted itself from shedding light on the impact of Paytm Payments Bank’s (PPBL) shutdown. Sharma said that there were no implications from the cancellation of the payments bank’s licence, adding that the investment in PPBL was already impaired as of March 31, 2024. 

He further declined to comment regarding the timeline to apply for Paytm’s wallet license. 

For context, the Reserve Bank of India (RBI) cancelled the banking licence of PPBL last month, citing concerns around the management of the bank. However, the central bank had already restricted the payments bank from providing any service since 2024, rendering the entity almost defunct. 

Following this, Paytm shifted its payments business to UPI partnerships with banks such as Axis Bank, HDFC Bank and SBI under the third-party application provider (TPAP) model. 

Overall, Paytm’s net profit for the quarter stood at ₹183 Cr in Q4 FY26 versus a loss of ₹545 Cr a fiscal year ago. Meanwhile its operating revenue rose 18.4% YoY to ₹2,264 Cr in the March quarter from ₹1,912 Cr during the same quarter last fiscal.  

Post the announcement of its Q4 results yesterday, Paytm shares rallied as high as 8.5% to ₹1,204.4 apiece during intraday trading session on the BSE today. It ended the session at ₹1,199.25 per share, up 8% from its previous close.

Meanwhile, brokerages have maintained their positive commentary on Paytm’s financial performance. Bernstein maintained its “outperform” rating on the fintech giant with a target price (TP) of ₹1,500.

“Q4 FY26 EBITDA came broadly in line with consensus at ₹130 Cr. Brokerage highlighted resilient profitability despite loss of PIDF incentives and no UPI incentive accrual this quarter,” added Bernstein.

Similarly, Citi and Jefferies also gave “Buy” rating to the fintech giant with a TP of ₹1,375 and ₹1,350, respectively. As per Citi, Paytm’s core payment margins (excluding subsidies) continue to grind up profits. 

On growth accelerators for FY27, Paytm indicated that marketing services will be a key focus area for the company. As part of this, the fintech major plans to use AI agents to strengthen merchant engagement tools over the next 12 months to shore up revenue growth in the segment. 

Additionally, the company added that the payments business (under Paytm Payments Services Limited (PPSL)) continues to see strong tailwinds in both offline and online merchants. This comes as PPSL began onboarding new customers after licence restrictions were lifted in mid-2025. 

The fintech major also noted that financial services, which account for 30% of its revenue, is compounding across merchant loans, a recovering personal loan book and wealth management business. The management wants to focus on scaling this, the company added.

The post Paytm Bets On AI Makeover To Drive FY27 Momentum appeared first on Inc42 Media.