Buy One 97 Communications; target of Rs 1160: Motilal Oswal

Motilal Oswal is bullish on One 97 Communications recommended buy rating on the stock with a target price of Rs 1160 in its research report dated October 22, 2023.

Broker Research

October 25, 2023 / 14:01 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on One 97 Communications

Paytm reported a net loss of INR2.9b (our est. INR2.8b loss) in 2QFY24. Total revenue grew 32% YoY/8% QoQ to INR25.2b (in line), supported by healthy growth in GMV, disbursements, and addition of subscription devices. Net payment margin grew 60% YoY/ 9% QoQ to INR7.1b in 2QFY24, which, along with healthy financial services revenue, resulted in improvements in contribution margin to ~57%. We revise our estimates slightly upwards and expect Paytm to report EBITDA of INR7.9b by FY25 vs. earlier estimate of INR7.8b. We continue to believe that Paytm will achieve earnings breakeven in FY25 and we estimate net earnings to rise sharply from FY26E onwards. We retain our BUY rating.

Outlook

We value Paytm based on 20x FY28E EV/EBITDA and discount the same to FY25E taking a discount rate of ~15%. We thus value the stock at INR1,160, which implies 5.3x FY25E P/Sales.

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