Emkay Global Financial's research report on One 97 Communications
Paytm posted lower EBITDA (before ESOP) loss at Rs0.4bn vs (Emkay: Rs0.7bn), mainly due to better lending revenue (even adjusted for the higher DLG cost) and continued cost optimization measures. This, coupled with higher treasury income on proceeds from sale of the entertainment business and stake in PayPay Corp (with lower depreciation and ESOP cost), led to lower net loss of Rs2.1bn (Emkay: Rs3.5bn). Lower Net payment margin was the only minor upset in 3Q. Exit MTU improved QoQ to 72mn from 68mn (Sep-24), but the average MTU base stood slightly lower at 70mn, as consumer onboarding started after NPCI approval in Oct-24. With the merchant payment/lending business going strong, an improving MTU will create a strong funnel for the financial/marketing service business/revenue that, along with better treasury income/continued cost optimization, should put Paytm on an early path to profitability in FY26E.
Outlook
Thus, we recently upgraded Paytm to BUY from Add with DCF-based TP of Rs1,050, implying FY27E EV/Op Rev at 3.4x and P/BV at 3.6x.
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