Following its first full year of profitability in FY26, Indian fintech giant Paytm is pivoting towards Artificial Intelligence (AI) to fuel its future growth. CEO Vijay Shekhar Sharma announced during the company’s Q4 FY26 earnings call that while Paytm is open to inorganic growth, new investments will be exclusively directed towards the AI sector. With a substantial cash reserve of ₹13,315 Cr as of March 2026, the company is poised to significantly bolster its presence in this burgeoning technological landscape.
Sharma clarified Paytm’s AI investment strategy, emphasizing that the company does not plan to build its own data centers. Instead, it intends to lease data center capacity and deploy its proprietary AI models on top of this infrastructure. “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,” Sharma stated.
The company aims to integrate AI across its entire platform, automating services for both consumers and merchants, spanning offerings from Paytm Money to Paytm Check-In. Paytm is already deploying AI for specific applications such as payments intelligence, fraud prevention, merchant onboarding, and collections. Furthermore, AI agents are being embedded within engineering functions to accelerate software development cycles and reduce associated costs. The company attributes its FY26 profitability turnaround, in part, to its AI-powered fraud detection and collections routing systems.
For merchants, AI has been integrated into Paytm’s Soundbox devices to provide business insights, customer notifications, and support. On the consumer front, AI is enhancing user acquisition by attracting higher-quality users at reduced costs and improving monetization through personalization. Paytm Check-In, the company’s travel ticketing platform, is actively experimenting with agentic interfaces to gauge consumer acceptance of this emerging technology, with Sharma noting that agentic interfaces have shown 7X to 8X higher funnel conversion rates compared to traditional interfaces.
Sharma views the current AI landscape as a reset opportunity, stating, “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.” He sees competitors not investing in AI as potential opportunities to capture their customer base.
Regarding the impact of the Paytm Payments Bank Limited (PPBL) shutdown, the company maintained a reserved stance. Sharma indicated that the cancellation of PPBL’s license had no implications, as the investment in PPBL was already impaired as of March 31, 2024. He declined to provide a timeline for applying for Paytm’s wallet license. The Reserve Bank of India (RBI) had canceled PPBL’s license due to management concerns, having previously restricted its services. Paytm has since transitioned its payments business to UPI partnerships with banks like Axis Bank, HDFC Bank, and SBI under the third-party application provider (TPAP) model.
In Q4 FY26, Paytm reported a net profit of ₹183 Cr, a significant turnaround from a loss of ₹545 Cr in the prior fiscal year. Operating revenue increased by 18.4% year-over-year to ₹2,264 Cr. Following these results, Paytm’s shares saw a notable rise. Brokerages largely maintained positive outlooks, with Bernstein reiterating an “outperform” rating and a target price of ₹1,500, citing resilient profitability despite the loss of incentives.
Paytm identified marketing services as a key growth accelerator for FY27, planning to leverage AI agents to enhance merchant engagement tools. The company also noted continued strength in its payments business (under Paytm Payments Services Limited) for both offline and online merchants, following the lifting of license restrictions in mid-2025. Financial services, contributing 30% of revenue, are also experiencing growth across merchant loans, personal loans, and wealth management, an area Paytm aims to scale further.
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