Despite reporting a hefty sequential jump in its Q3 profit to INR 225 Cr, shares of Paytm plunged close to 5% during intraday trading today to touch a low of INR 1,112.55 on the BSE. 

A key concern of investors was uncertainty over continuation of incentives under the Payments Infrastructure Development Fund (PIDF). 

The company’s shares have been under pressure since last week, when a report by CNBC TV18 raised concerns over the financial impact that could arise from the discontinuation of the PIDF. The scheme, which was implemented by the RBI to incentivise deployment of digital payments infrastructure, has not been extended beyond December 2025 as of now.

Last week, Paytm said that the amount of incentive for H1 FY26 under the PIDF stood at INR 128 Cr, triggering investor concerns over the company’s top line performance moving forward. Brokerages have estimated that this number surged to INR 220 Cr for 9M FY26. The company’s shares have plummeted more than 10% since that disclosure. 

Amid all these, the company reported a more than 10X sequential jump in its profit to INR 225 Cr in Q3 FY26 yesterday. Its operating revenue zoomed 20% YoY and 7% QoQ to INR 2,194 Cr. 

Paytm CEO Vijay Shekhar Sharma kicked off the company’s Q3 earnings call by addressing concerns over PIDF, which he termed to be “the elephant in the room”.

Sharma said that the scheme helped the company extend its digital payments solution to India’s hinterlands at a time when device costs were a barrier. However, he added that merchant willingness to pay has since been firmly established. He noted that Paytm was never a top PIDF deployer as it did not view the scheme as a revenue lever. 

“PIDF was never our business model. We are not here to take grants as revenue – we are here to build payments and financial services that merchants are willing to pay for,” he noted.

Moving forward, the company expects to offset the impact of the discontinuation of the scheme through higher subscriptions and cross-selling, with 30-40% of the impact mitigated in Q3 and more to be done over time.

While Sharma maintained confidence in the company’s ability to absorb the impact, brokerages have a mixed stance on Paytm. Here’s a gist of some of the key brokerage notes released on Paytm today:

Bernstein – Outperform, Price Target (PT) Unchanged At INR 1,600: Bernstein attributed the company’s strong Q3 performance to cost discipline and strong GMV growth. 

CLSA – Underperform, PT Of INR 1,000: While the brokerage said that the results were pretty much in-line with expectations, it raised concern over declining revenue from marketing services and a lack of incentive from PIDF moving forward. It said this would put pressure on the company’s top line.

CITI – Buy, PT Cut To INR 1,375: The brokerage said cessation of PIDF incentives will have significant impact on Paytm’s EBITDA.

Jefferies – Buy, PT Increased To INR 1,450: It said that the company’s profit was slightly ahead of estimates despite a one-time labour cost impact of INR 12 Cr. It believes clarity on plans to compensate for lower PIDF incentive will be the key moving forward.

Shares of Paytm ended today’s trading session 2.71% lower at INR 1,137 on the BSE.