Key Takeaways
- PayU India grew revenue 11% to $781 million in FY26 and achieved its first full year of operating profit with $18 million adjusted EBITDA
- The payments segment drove 74% of total revenue at $577 million, growing 10% year-over-year
- PayU deliberately exited negative margin portfolios in H2 FY26, trading short-term revenue for profitability
PayU India posted $781 million in revenue for fiscal year 2026, an 11% increase from the prior year. More significant: Prosus's Indian fintech arm reported its first full year of operating profit, swinging from a $25 million EBITDA loss in FY25 to an $18 million gain. The turnaround came from a deliberate choice to exit money-losing business lines rather than chase growth at any cost.
That $43 million swing in profitability marks a strategic shift for one of India's largest payment processors. PayU competes directly with Razorpay, PhonePe, and Paytm in a market where margins have historically been razor-thin and investor patience for losses has worn thin.
Why did PayU's revenue drop in the second half?
The headline growth number hides a deliberate contraction. PayU India's revenue actually fell from $395 million in H1 FY26 to $384 million in H2. The company exited what Prosus called "negative margin portfolios" during the October-March period.
Translation: PayU walked away from business that generated revenue but lost money on every transaction. This is a significant break from the growth-at-all-costs playbook that defined Indian fintech for years. When a company chooses lower revenue to reach profitability, it signals management is optimizing for sustainable unit economics rather than top-line metrics that impress investors but burn cash.
Where is PayU's revenue actually coming from?
The payments segment remains the core business. It contributed $577 million, or 74% of total revenue, growing 10% year-over-year. Prosus noted in its annual report that PayU achieved "faster-than-market payment-processing growth in certain segments" while simultaneously pruning the losing lines.
The remaining 26% of revenue comes from PayU's credit and consumer lending businesses. The company has been expanding beyond pure payment processing into financial services, though the earnings breakdown suggests the payments engine still drives the economics.
What does this mean for India's payments market?
PayU's profitability push reflects broader pressure on Indian fintech. The Reserve Bank of India has tightened oversight on digital lenders. Global investors, burned by WeWork and other growth-story blowups, now demand clearer paths to positive cash flow. Prosus itself has been under shareholder pressure to demonstrate returns from its substantial emerging market bets.
For competitors like Razorpay and PhonePe, PayU's numbers set a benchmark. If one major player can hit profitability at scale, investors will ask why others cannot. That puts pressure on the entire sector to rationalize pricing and exit low-margin segments.
The flip side: PayU's market share could slip if competitors continue subsidizing merchant fees to grab volume. The company is betting that sustainable profits matter more than being the largest processor. That bet will play out over the next two to three years.
Prosus's broader fintech picture
PayU India is one piece of Prosus's global fintech portfolio, which spans Latin America, Europe, and Asia. The Dutch investor, spun off from South African media company Naspers, has faced persistent questions about the gap between its net asset value and stock price. Showing that portfolio companies can reach profitability helps close that gap.
India remains a critical market for Prosus. Beyond PayU, the company holds stakes in education platform Byju's (now troubled) and food delivery giant Swiggy. PayU's clean profitability stands in contrast to the messier stories elsewhere in the portfolio.
Logicity's Take
PayU's decision to sacrifice $11 million in H2 revenue to exit negative margin portfolios is the story here, not the 11% growth headline. This signals a maturing Indian fintech sector where disciplined unit economics now trump vanity metrics. For CTOs and product leaders evaluating payment processors, the competitive dynamics may shift: expect fewer aggressive discounting wars as other players follow PayU's profitability playbook. Merchants who built cost models around subsidized rates should prepare for gradual price normalization across the sector.
Frequently Asked Questions
How much revenue did PayU India generate in FY26?
PayU India reported $781 million in revenue for fiscal year 2026, representing 11% growth compared to the previous year.
Is PayU India profitable?
Yes, FY26 was PayU India's first full year of operating profit. The company reported $18 million in adjusted EBITDA, compared to a $25 million loss in FY25.
Why did PayU India's revenue decline in the second half of FY26?
PayU deliberately exited negative margin portfolios, which reduced revenue from $395 million in H1 to $384 million in H2, but improved overall profitability.
Who owns PayU India?
PayU India is owned by Prosus, a Dutch technology investment company that was spun off from South African media group Naspers.
What percentage of PayU's revenue comes from payments?
The payments segment contributed 74% of PayU India's total revenue at $577 million, growing 10% year-over-year.
Another Indian tech company reporting strong FY26 growth driven by strategic segment focus
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Source: Tech-Economic Times / ET
Huma Shazia
Senior AI & Tech Writer
Produced with AI assistance and reviewed by the Logicity editorial team. Learn more in our Editorial Policy.
