Paytm reported a net loss of Rs 5.45 billion (versus our estimated loss of Rs 1.1 billion), driven by higher charges toward accelerated ESOP expenses. Revenue from payments increased 4% QoQ to Rs 10.5 billion, while revenue from financial services increased 9% QoQ to Rs 5.5 billion, driven by improved take rates from DLG loans.
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Motilal Oswal Report
One 97 Communications Ltd. reported a year of recovery in business metrics during FY25. Disbursement recovery is well on track, led by healthy disbursements in merchant loans. Gross merchandise value also demonstrated steady state recovery.
Most business metrics continue to improve as recovery progresses. We expect a steady business recovery, leading to a 29% revenue CAGR over FY25-27.
Contribution margin expanded to 56.1% (54.4% excluding UPI incentives) due to cost control. The company’s exploration of global markets, though with limited capital commitment, and its strong cash position further provide comfort.
The potential introduction of MDR on UPI is expected to significantly boost Paytm’s revenue and incentivize the company to drive market share gains in consumer payments.
We estimate a 29% CAGR in disbursements over FY25-27, with healthy take rates expected as the company forays into DLG arrangements.
We maintain our contribution profit estimates and project Paytm to turn Ebitda positive by FY27. We value Paytm at Rs 870 based on 18 times FY30E Ebitda discounted to FY26E, which corresponds to 5.2x FY26E sales. We reiterate our Neutral rating on the stock.
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