Buy One 97 Communications (Paytm); target of Rs 1285: ICICI Securities

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26 Aug, 2025 12:21

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ICICI Securities research report on One 97 Communications (Paytm)

One 97 Communications (Paytm) continues to improve its revenue and margin profile, evident in narrowing of consolidated loss at Rs5.7bn in Q2FY23 (vs loss of Rs6.5bn in Q1FY23). The performance was characterised by 1) sustained lower processing charges and net payment margin improving a tad; 2) sharp acceleration in lending business with disbursements of Rs73bn; (3) enhanced contribution/adjusted-EBITDA (before ESOP cost) margin with higher financial services/cloud revenue growth further aided by lower indirect costs; 4) sustained growth in monthly transacting users (MTUs), deployment of offline devices and continued build-up of gross merchandise value (GMV). What failed to cheer: 1) Contribution margin expansion capped at 84bps QoQ to 44.1% due to 34%/15% QoQ increase in promotional/other direct expenses, 2) decline in commerce revenue. Steady improvement in margin profile with better monetisation suggests achievement of operating profitability (positive EBITDA before ESOP cost) ahead of its guided timeline of Q2FY24.

Outlook

Maintain BUY with an unchanged target price of Rs1,285 based on customer lifetime value methodology.

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One 97 Communications - 08-11-2022 - icics