Neutral One 97 Communications; target of Rs 870: Motilal Oswal

Motilal Oswal recommended Neutral rating on One 97 Communications with a target price of Rs 870 in its research report dated March 19, 2025.

Broker Research

March 21, 2025 / 10:46 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on One 97 Communications

Paytm has successfully navigated through the regulatory challenges while retaining most of its merchant base. The company’s merchant base grew 9% YoY to 43m in 3QFY25, while the number of merchants with devices rose 10% YoY to 11.7m. With 85% of GMV coming from merchants, Paytm maintains a robust market share in merchant business, though its UPI market share has moderated. We estimate a 24% CAGR in GMV over FY25-27E. Leveraging its merchant network, Paytm is scaling up loan distribution through the first loss default guarantee (FLDG), with 18 lending partners on its platform. The financial services business is expected to contribute 27% of total revenue by FY28E (~20% in FY24), thus driving a 25% CAGR in total revenue. The reduction in capex and depreciation expenses, along with strong costcontrol, should help Paytm deliver positive adj. EBITDA by 4QFY25E and positive overall EBITDA by FY27E. We, thus, estimate Paytm to regain its strong hold on profitability in FY27E, with estimated PAT of INR12.1b.

Outlook

We remain watchful on the challenging macro-environment, traction in the financial distribution business and near-term UPI market share. Maintain Neutral rating with a revised TP of INR870 (based on 17.7xSep’26E EBITDA).

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