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PremiumPaytm Q2 Results Highlights: One97 Communications, the parent company of fintech giant Paytm, reported a 32% YoY rise in its revenue to ₹2518.6 crore in the July-September quarter of fiscal 2023-24 (Q2FY24). The fintech major had reported revenue of ₹1914 crore in Q2 FY23. Its net loss (attributable to owners) narrowed down to ₹290.05 crore in the September quarter of current financial year.
The company reported a sequential rise of 7 per cent in its revenue from ₹2341 recorded in June quarter of the current financial year. During the last quarter, the company had posted a net loss of Rs
On a quarterly basis, Paytm reported a marginal increase of 7 percent as it saw its revenue recorded at ₹2,341 crore in Q1 of FY24. During the last quarter, it reported a net consolidated loss of ₹357 crore.
Paytm Q2 Updates: The number of Personal Loans distributed grew 27% YoY, while the value of Personal Loans grew 91% YoY to ₹3,927 crore. Average ticket size is Rs165,000 (approx). With average tenure of 16 months.
Paytm Q2 LIVE Updates: Cash balance of the fintech firm rose to ₹8,754 crore as of quarter ending September 2023, as compared to ₹8,367 Cr as of quarter ending June 2023. The company claims of adding cash balances for three consecutive quarters, adjusted for ₹1,056 Cr of funds used for buyback (including buyback tax and other transaction costs) in Q3 and Q4 of FY 2023.
Paytm Q2 LIVE: The number of Merchant Loans distributed grew 130% YoY in Q2 FY 2024, while the value of Merchant Loans grew 171% YoY to ₹3,275 Cr. Proportion of loans distributed to a subscription merchant remains greater than 85% this quarter. Average ticket size is ~ ₹180,000 with average tenure of ~13 months.
During the September quarter, merchant subscriptions of Paytm stood at 92 Lakh, by registering a growth of 44 Lakh YoY and 14 Lakh QoQ.
Paytm Q2 LIVE Updates: The company witnessed a major rise in its loan disbursement in the quarter under review. Loans Distributed through Paytm increased by 122% YoY to ₹16,211 crore.
Paytm LIVE Updates: Contribution margin increased to 57%, expansion of 13 percent point YoY, due to increase in net payment margin and growth in loan distribution business.
Paytm Q2 LIVE Updates: Revenue from financial services and others up 64% YoY to ₹571 crore. Unique users, who have taken loan through Paytm platform, reaches 1.18 Cr; Loan distribution. Company continues to scale with ₹16,211 Cr of loan disbursement (up 122% YoY).
Paytm LIVE Updates: Revenue from payments business up 28% YoY to ₹1,524 Cr. Net payment margin up 60% YoY to ₹707 Cr; GMV up 41% YoY to ₹4.5 Lakh Cr. Payment processing margin is at the higher end of 7-9bps range (without UPI incentive). Merchant paying subscription for devices has reached 92 Lakh as of September 2023, an increase of 44 Lakh YoY and 14 Lakh QoQ
Paytm Q2 LIVE Updates: Net loss of the company narrows down to ₹290.05 crore in September quarter against ₹571.1 crore in the year ago period.
Paytm Q2 Live Updates: Paytm reported a 32% rise in its revenue to ₹2518.5 crore in the September quarter against ₹1914 crore in the year ago period.
Paytm firm is looking to add more lending partners in FY24. The move will help the company in absorbing the flow that it is capable of originating via its platform, according to Motilal Oswal.
According to brokerage firm Motilal Oswal, PayTM is expected to witness an approximate 35% rise in its revenue from operations in the September quarter. It is likely to come around ₹2,500 crore.
"The profitability of Paytm’s core payment business is further enhanced by its financial services division, which benefits from inherently higher contribution margin,'' said the brokerage.
Paytm said it remains focused on the portfolio performance of its lending partners, and growth may be subdued until the industry outlook improves. However, it added that with its subscription-as-a-service model, the strong adoption of devices drives subscription revenues and higher payment volumes, while increasing the funnel for its merchant loan distribution.
Domestic equity benchmarks Nifty 50 and the Sensex ended in negative territory for the third consecutive session on Friday, October 20, as soaring US Treasury yields, concerns about potential interest rate hikes by the US Fed, and the ongoing war between Israel and Hamas kept investors on edge. Nifty 50 today closed at 19,542.65, down 82 points, or 0.42 per cent while the Sensex ended the day at 65,397.62, down 232 points, or 0.35 per cent.
Paytm share price has witnessed strong buying interest after making life-time low of ₹438.35 apiece on NSE. But, Goldman Sachs believes that Paytm share price has potential to continue uptrend. The global brokerage has predicted that paytm share price may go up to Rs1,250 apiece in long term. The then beaten down stock bottomed out at its record low and witnessed strong bottom fishing by value pickers.
Paytm's revenue for the September quarter is likely to jump 35 per cent from ₹1,914 crore reported in the corresponding quarter last fiscal, according to an average estimate of three brokerages. The continued momentum in lending and payments will drive revenue growth.
The company's loan distribution business (in partnership with lender partners) increased 137 per cent YoY, with disbursements of ₹10,710 crore in July-August 2023, The number of loans also increased 47 per cent YoY to 8.8 million in July-August 2023.
Paytm reported a 20 per cent YoY growth in average monthly transacting users at 94 million in the July-August period from 79 million in the same period last year. Paytm disbursed loans worth ₹5,517 crore through its lending platform in August 2023, the company said in a press release.
Ahead of the announcement of Q2 results, shares of Paytm settled 1.93 per cent higher at ₹987.35 apiece on the BSE.
Strong growth outlook, improved revenue mix and operating leverage should drive EBITDA margins (15% by FY26E) on a multiyear expansionary path. In the next 4 quarters, Paytm will turn profitable and join the global list of large fintechs which enjoy strong growth (>30%), double-digit margins and healthy profitability. However, its valuations at 3.6x EV/revenue remain attractive compared to the 5-6x multiple for this group. As Paytm witnesses strong growth and steady margin expansion, we expect re-rating to accelerate. We initiate at Buy with a target price of ₹1,300, Jefferies said.
In 2 years, Paytm has become the 3rd largest non-bank consumption credit platform (by disbursals) and 2nd largest such acquisition platform with ~6mn new credit customer additions in FY23. At system level, Paytm's market share in unsecured retail credit disbursals is now ~2.8% and given the strong outlook, we expect it to increase to ~6% (by FY26E) led by ~22% mkt share in BNPL (vs ~12% currently) and ~2% in personal loans (Vs 1.3% currently). Within SME, Paytm's share in micro SME segment (<Rs1mn loans) will increase to ~7% (vs 3.5% currently), according to Jefferies.
Paytm's large two-sided payments network provides the underlying rails for conversion of a small-ticket digital spend into a credit product at no incremental cost. Similarly, on the merchant side, the QR code / Soundbox enables collection of EMI from the daily receipts at little to no collection cost. This capability to create credit products around payments is key for exponential (~10x in 2yrs) ramp up in credit disbursals on the platform, Jefferies said.
The company deployed 8.7 million devices as of August 2023, an increase of 4.2 million devices year-on-year. “With our subscription-as-a-service model, the strong adoption of devices drives subscription revenues and higher payment volumes, while increasing the funnel for our merchant loan distribution," said the company.
Paytm said that over the past several quarters, it planned to calibrate growth to further tighten credit quality of loans distributed on its platform. The company has been able to successfully demonstrate improving credit quality for Paytm Postpaid, where the ECL (expected credit loss) has reduced to a range of 0.65% - 0.85% from a range of 0.75% - 1.00% in Q4 of FY23.
In next 4 quarters, Paytm will turn profitable and be amongst the few large profitable fintechs globally that enjoy strong growth (>30%), double-digit EBITDA margins and stable profitability. However, its valuations at 3.6x FY25 EV/revenue remain at a ~40% discount to this group. We use DCF valuation methodology with growth assumptions of near-term 27%, long-term 17% and terminal 8%. At our valuation, we get implied EV/revenue of 4.6x and EV/adj. EBITDA of ~37x (Sep'25). Using SOTP (for stake in associates), we arrive at a PT of Rs1,300. Key risks are a) asset quality deterioration impacting credit business growth, b) supply pressure from PE selling, c) regulatory risk, Jefferies said.
One97 Communications Ltd, which runs the brand Paytm, reported a 20% year-on-year (YoY) growth in average monthly transacting users at 94 million in the July-August period from 79 million in the same period last year. In August 2023, Paytm disbursed loans worth ₹5,517 crore ($667 million) through its lending platform, the company said in a press release. Read here
The initial public offering (IPO) of Paytm was launched in November 2021 at a price band of ₹2,080 to ₹2,150 per equity share. The book build issue listed on BSE and NSE at near 9% discount as Paytm share price opened on NSE at ₹1,950 apiece levels and it listed on BSE at ₹1,955 per share levels. The stock went further deep and continue to slide for near one year after listing. It bottomed out at the end of November 2022 after making its life-time low of ₹438.35 apiece, around 80% cent below its upper price band of ₹2,150 per equity share. Even if Paytm share price meets the given ₹1,250 per share target given by Goldman Sachs, it would be near 40% below its upper price band of ₹2,150 apiece.
In its upside scenario, Jefferies has a target price of ₹1,600 per share for Paytm. It expects GMV growth of 40% CAGR over FY23-26E; revenue CAGR of 35% with contribution margin expansion of +800 bps to ~62%. The brokerage expects adjusted EBITDA margins expanding to 24%.
Paytm’s lending partners remain in control of risk underwriting thresholds and given the short tenor of loans, are jointly creating a large base (>10 mn) of credit-tested users. Delinquency trends have improved in BNPL (largest product) where the share of repeat users is ~65%. As portfolio vintage grows, rising share of credit-tested users in disbursals (from ~50% currently) will help control asset quality outcomes, Jefferies said.
Paytm founder Vijay Shekhar Sharma buying 10.30% stake in the company from Antfin resulted in a Chinese entity ceasing to be largest shareholder in the company, which analysts believe to be positive for Paytm’s fundamentals and also remove overhang on the stock.
Analysts at BofA Securities noted that a Chinese shareholder ceasing to be the largest shareholder, would also directionally be positive for the company fundamentals.
“We consider this announcement to be positive as it removes overhang on the stock from the risk that Antfin in future may look to reduce its stake leading to more supply. Furthermore, Sharma buying the stake at Friday's close indicates his confidence in the story with a “skin in the game" approach," BofA said in a report.
This event also reduces risk that some other strategic investor coming who would have a major stake similar to that of Sharma, it added. Moreover, analysts believe a Chinese shareholder (Antfin) ceasing to be the largest shareholder, would also directionally be positive for the company fundamentals. Read here
Paytm founder Vijay Shekhar Sharma in August purchased a 10.30% stake in the company from Antfin (Netherlands) Holding BV. Antfin transferred 6.53 crore shares of Paytm to Resilient Asset Management B.V., an entity in which Sharma owns the complete 100% stake. With this, Sharma increased his holding in the company to 19.42%, becoming the largest shareholder in the fintech giant, while Antfin’s stake dropped to 13.5%. Antfin, an affiliate of China’s Ant Group Co, ceased to be the largest shareholder in Paytm. Read here
Paytm’s contribution profits will outpace revenues as margins improve by 300 bps to ~57%, led by rising share of financial services in revenue mix, and better core payments margins as share of credit-linked spends in non-UPI GMV increases, Jefferies said.
Paytm share price hit a 52-week high on Friday ahead of the release of September quarter earnings later today. The shares of One 97 Communications, the parent company of Paytm, opened at ₹972.95 apiece, up by 0.43% than previous close of ₹968.70 apiece on the BSE.
Paytm shares gained momentum during the day and rallied as much as 3.05% to hit a 52-week high of ₹998.30 apiece. The stock was last trading 1.52% higher at ₹983.45 apiece.
Expect operating profitability to increase, driven by improvement in contribution margin & operating leverage. Healthy growth likely in total revenue and steady growth seen in loan disbursements and GMV. Expect the number of subscription payment devices to show a strong traction, Motilal Oswal said.
The brokerage has a ‘Buy’ rating on the stock with a target price of ₹1,000 per share.
Global brokerage Goldman Sachs estimates 30 per cent YoY revenue growth for Paytm in the September quarter at the higher end of its India internet coverage, with a 6.3 per cent earnings before interest, tax, depreciation, and amortization (EBITDA) margin.
“We see upside to both Paytm earnings (we are 6%-11% ahead of Visible Alpha consensus on FY25/FY26 EBITDA) and multiples (GS TP implied multiple of 47x FY26 P/E), as we expect continued momentum in lending and payments, with strong operating leverage in the business model. In addition, resolution of outstanding regulatory issues (customer onboarding ban on Paytm Payments Bank or online merchant onboarding ban), and/or inclusion of a bank as a lending partner could act as catalysts for Paytm," the brokerage said.
Paytm share price has witnessed strong buying interest after making life-time low of ₹438.35 apiece on NSE. The then beaten down stock bottomed out at its record low and witnessed strong bottom fishing by value pickers. Paytm shares have rallied more than 16% in the last three months and are up over 86% year-to-date (YTD). The stock is up over 56% in the last one year.
Goldman Sachs believes that Paytm share price has potential to continue uptrend. The global brokerage has predicted that paytm share price may go up to ₹1250 apiece in the long term.
On reasons for being bullish on Paytm shares, Goldman Sachs report says, "Paytm’s operating metrics have been surprising positively, and we are further raising our FY24-26E EBITDA estimates by 2-5%, with our target price moving to ₹1,250 (was ₹1,200). We forecast 30% YoY revenue growth for Paytm in 2QFY24 (Sep ’23; results on 20 October), at the higher end of our India internet coverage, with a 6.3% EBITDA margin (excl. ESOP; was 3.6% in 1Q). At US$200 mn in FY25 EBITDA, we continue to expect Paytm to be the most profitable company within India internet, and see the company turning net income positive in FY25 as a catalyst for the stock." Read here
In 2 years, Paytm's revenues have jumped 3x, gross margins surged to 54% (from 13%) and placed the company on a path to profitability
With just 5% user penetration, Paytm’s loan disbursals have surged 10x to over $8 billion. In payments, revenues expanded around 2.5x with ramp-up in merchant subscription business and margins jumped 20pp, led by industry tailwinds and management shedding unprofitable lines.
Fintech major Paytm is expected to enter the global list of large profitable fintechs in four quarters and its share price is yet to reflect the company’s changed profile, according to global brokerage house Jefferies.
Jefferies has initiated its coverage on One 97 Communications, the parent company of Paytm, with a ‘Buy’ rating and a target price of ₹1,300 per share, implying an upside of over 37% from Wednesday’s closing price.
“In next 4 quarters, Paytm will turn profitable and be amongst the few large profitable fintechs globally that enjoy strong growth (>30%), double-digit EBITDA margins and stable profitability. However, its valuations at 3.6x FY25 EV/revenue remain at a 40% discount to this group," Jefferies said. Read here
One97 Communications - the operator and parent company of Paytm will announce its July-September quarter results for fiscal 2023-24 (Q2FY24) on Friday, October 20. The fintech major is expected to report strong revenue growth driven by high loan disbursals, according to estimates by analysts and leading brokerage houses. Read full report here
Paytm reported a 20% YoY growth in average monthly transacting users at 94 million in the July-August period from 79 million in the same period last year. Paytm disbursed loans worth ₹5,517 crore through its lending platform in August 2023, the company said.
The company's merchant payment volumes (GMV) increased by 43% year-on-year to ₹3 trillion ($36.3 billion) in July-August 2023, up from ₹2.1 trillion in July-August 2022. Paytm continued to see an increase in GMV of non-UPI instruments like EMI and cards.
The company's loan distribution business (in partnership with lender partners) increased 137 per cent YoY, with disbursements of ₹10,710 crore in July-August 2023, The number of loans also increased 47 per cent YoY to 8.8 million in July-August 2023. Read here
The gross merchandise value (GMV) is also expected to rise further in the second quarter of current fiscal, after registering a growth of 37% year-on-year (YoY) to ₹4.05 lakh crore in the preceding April-June quarter.
GMV is likely to rise more than 45% YoY and the total value of loan disbursed may come in above 130%. “We raise our FY25E GMV and disbursement estimates by 5 per cent and 21 per cent, respectively, and estimate the mix of Financial revenue to increase to 32 per cent by FY25E from 19 per cent in FY23," Motilal Oswal said.
Domestic brokerage firm Motilal Oswal estimates that the fintech's revenue from operations in the September quarter is likely to see a growth of 35% year-on-year to around ₹2,600 crore. Net losses of the company is likely to narrow by over 51% to ₹280 crore.
The profitability of Paytm’s core payment business is further enhanced by its financial services division, which benefits from inherently higher contribution margin, said the brokerage.
Paytm is looking to add more lending partners in FY24, which will help absorb the flow that it is capable of originating via its platform. “We believe that constant improvement in contribution margin and operating leverage will continue to drive Paytm’s operating profitability," said Motilal Oswal.
A total of 38 Dalal Street listed companies are going to declare their Q2 earning for the financial year 2023-24. Those 38 listed companies include JSW Steel, JSW Energy, Paytm, Hindustan Zinc, Central Bank of India, L&T Finance Holdings, Poonawalla Fincorp, Laurus Labs, Tejas Networks, Atul, Sunteck Realty, Just Dial, Butterfly Gandhimathi Appliances, etc. Read full report here
Paytm is expected to report strong revenue growth driven by high loan disbursals, according to estimates by analysts and leading brokerage houses. The fintech major’s revenue in Q2FY24 may rise 35% YoY, while its net losses are likely to narrow down. Operating profitability is likely to increase with steady growth in loan disbursements.
One97 Communications, the parent company of fintech giant Paytm, will announce its financial results for the July-September quarter of fiscal 2023-24 (Q2FY24) today, 20 October 2023.
