One 97 Communications Ltd, commonly known as Paytm, is expected to announce a loss in the March quarter, according to Motilal Oswal Securities. The anticipated loss is attributed to the expected impact on operating profit following the Reserve Bank of India’s (RBI) ban on Paytm Payments Bank (PPBL).
The domestic brokerage predicts a decline in Paytm’s expenses and gross merchandise value (GMV). Additionally, a decline in overall revenue growth is anticipated, with a focus on monitoring any further consequences of the RBI notification.
“We estimate a 23% YoY decline in GMV in 4QFY24, amounting to Rs 3.9t. Additionally, the value of disbursed loans is expected to plunge 67% QoQ, as the company suspended overdue loans due to RBI concerns and placed merchant loans. hold pending data on QR transition,” the brokerage said in a report.
The central bank’s order on January 31 directed Paytm Payments Bank to cease most of its operations, including credit products, deposits and digital wallets, citing persistent non-compliance.
However, a recent development saw the National Payments Corporation of India (NPCI) giving Paytm permission to participate in the Unified Payments Interface (UPI) as a Third-Party Application Provider (TPAP) under a multi-bank model. |
Income drop
Motilal Oswal projects revenue from operations to amount to Rs 1,830 crore, marking a 21% year-on-year decline. Contribution margin is expected to stand at 59.6%, with EBITDA margin estimated at minus 23.6% and adjusted EBITDA margin at minus 2.5%.
Income from operations is projected to decline by 21% YoY to Rs 1,830 crore, while contribution profit is estimated to decline by 15% YoY to Rs 1,090 crore, with a contribution margin of 60%.
Adjusted EBITDA loss is estimated at Rs 50 crore. We factored in UPI incentive in our estimates during 4Q, the brokerage said.
“While the overall growth of the system remains robust, regulators have identified various issues in certain companies. Accordingly, there will be increased scrutiny of overall growth in the financial sector as the focus shifts to effectively managing compliance and fostering growth. We remain alert to regulatory actions requiring . increased vigilance and compliance by all entities involved,” the brokerage said.
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