PayU India expects to achieve company-wide Ebitda breakeven in FY26, driven by profitability in its payments unit and a turnaround in its credit business led by merchant lending. Backed by structural reforms, digital lending innovations, and capital infusion from its parent, the fintech major is realigning its business under regulatory oversight for long-term stability.
Digital payments company PayU India is poised to reach Ebitda breakeven in FY26, buoyed by a sharp turnaround in its credit operations and steady profitability in its payments business, according to Group Chief Financial Officer Arvind Agarwal.
After three consecutive years of Ebitda-positive performance in payments, PayU India expects the credit business to turn profitable in Q2FY26, marking a significant milestone in its post-restructuring journey. “We have a 5% Ebitda margin in payments and are now pushing our credit vertical toward breakeven,” said Agarwal.
Merchant Lending Drives Credit Turnaround
The revival in credit profitability stems from PayU India’s focus on data-driven merchant lending. The credit arm, which disbursed over $1.1 billion in FY25, has strategically shifted from aggregator-led models to digital ecosystem-based sourcing. Lending to nearly 200,000 merchants, the company has achieved a 4–5% return on assets, with expectations of reaching 15% return on equity in the medium term.
Around 90% of lending is now on the firm’s licensed NBFC book, improving unit economics and giving the company more control over risk and margin structures.
Regulatory Alignment Strengthens Structure
In response to regulatory concerns, PayU India underwent a comprehensive restructuring in 2024, consolidating all operations — payments, NBFC, pre-paid instruments, and BBPS — under a single holding entity, PayU Payments. This structural simplification facilitated the company’s successful receipt of a full payment aggregator license from the Reserve Bank of India in May 2025.
“Being fully licensed and inspected annually by the RBI positions us well for long-term compliance and operational resilience,” Agarwal noted, adding that compliance standards have reached near-bank levels for fintech players.
Value-Added Services Boost Payments Margins
The payments unit continues to grow on the back of added services such as checkout EMI, fraud scoring, dynamic currency conversion, and recommendation engines. These services contribute 25% of payment revenue, with gross margins at 20%.
Processing nearly $80 billion in total payment volume in FY25, PayU India is expected to cross $100 billion this fiscal, covering over 2.5 billion transactions.
Capital Allocation and Future Roadmap
Backed by a $200 million infusion in FY25 from its Dutch parent, PayU India is deploying capital equally between credit expansion and digital payments innovation. Another $100–120 million is planned for FY26 to support merchant lending and UPI technologies.
Innovation remains a key focus, especially through strategic platforms such as Mindgate and Wibmo, where investments are driving growth in UPI and fraud prevention capabilities.
The broader SaaS business is projected to exit FY26 with $100 million in Annual Recurring Revenue, strengthening the company’s position as a platform provider for banks and financial institutions.
IPO Readiness and Financial Stability
While PayU India is not actively seeking additional capital, Agarwal noted that the company is financially prepared for an IPO once market and internal conditions align. With the credit segment breaking even and overall capitalisation healthy, the focus remains on scalable, profitable growth across core verticals.
“We’re no longer in a cash-burn phase. Our payments unit is stable, credit is improving, and compliance frameworks are mature. This is a sustainable, long-term play,” Agarwal concluded.