Paytm is expected to report strong revenue growth with a narrowing of its net loss during the third quarter of FY24 driven by an improvement in operational performance.
One 97 Communications, the parent company of fintech giant Paytm, will announce its earnings for the October-December quarter of FY24 on Friday, January 19.
The company’s revenue from operations during Q3FY24 is expected to grow 32% year-on-year (YoY) to ₹2,721 crore, according to brokers’ estimates. Revenue may rise 8% on a sequential basis.
Paytm Q3 loss is estimated to fall by 29% YoY to ₹280 crores. On a sequential basis, losses may narrow by 4.3% from the September quarter.
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The company’s operating profit is also expected to increase, driven by an improvement in contribution margin on a sequential basis
In the September quarter, Paytm reported revenue of ₹2,518.6 crore and a net loss of ₹290.05 crores.
Yes Securities assumes 6% QoQ growth in Payment Services to Consumers, 12% QoQ growth in Payment Services to Merchants and 6% QoQ growth in Financial Services and Other and achieves overall growth in income from operations of 8.1% QoQ.
“We forecast Payments Processing (PPC) as a proportion of Payment Revenue to be at 54.5%, a metric that was 54.4% in 2QFY24. We arrive at Total Expenses (ex PPC) growth of 6% QoQ, compared to growth of 3% in 2QFY24 , resulting in an EBITDA margin (ex-Other Income and after ESOP cost) of -8.3%, an improvement of 89. bps QoQ,” said Yes Securities.
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Brokerage firm Motilal Oswal Financial Services expects healthy growth in total revenue and decline in expenses and GMV during the quarter. However, it also expects the number of subscription devices to grow.
Meanwhile, UBS expects Paytm to break even on EBITDA in FY25 and achieve a 20% EBITDA margin by FY28. It sees this as a key re-rating trigger, as seen with other new-age companies like Zomato, where investors value profit growth more than pure growth.
Read here: Paytm share price rallies over 3% as UBS initiates coverage with ‘Buy’ call; sees EBITDA break-even in FY25
Paytm’s omni-channel payments business has earned it a 25% industry-leading Gross Merchandise Value (GMV). Its large top-of-the-funnel payments business boosted monetization across commercial devices and loans.
“We believe that regulatory issues have passed for payments and expect Paytm to benefit from a 24% CAGR in the payments player share in FY23-28E. Beyond payments, Paytm’s lending grew 7 times in FY22-24E, with lending partners rising to nine in FY24 from four in FY22,” UBS said.
Paytm’s share price has seen a decent rally over the past year. Paytm’s stock has gained over 42% in a year and is up over 22% in a month.
At 3:20 pm, Paytm shares were trading 2.07% higher at ₹751.05 on the BSE.
Read all the Q3 results here
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Published: 18 Jan 2024, 15:22 IST