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Shares of One 97 Communications Ltd (Paytm) rose more than 7% on the BSE to 563 apiece in Monday's opening deals after the fintech company posted its first-ever quarterly operating profit as a listed firm and the company's losses also narrowed during the third quarter of the current fiscal (Q3 FY23).

Paytm's net loss in the quarter through December narrowed to 392 crore as compared to 779 crore a year earlier whereas the leading digital payments brand's revenue from operations rose 42% to 2,062 crore.

The company said that the growth driven by increase in merchant subscription revenues, growth in loan distribution and momentum in commerce business. YoY growth comparison was impacted by timing of festive season and UPI incentive recorded in Q3 FY 2022 (for three quarters) versus nil recorded in this quarter.

“I am very happy to share that our company has achieved this milestone of EBITDA before ESOP cost profitability in the December 2022 quarter itself. This is three quarters ahead of our guidance.. With our focus on growth and keeping a tight vigil on operational risk and compliances, I am very confident that we will soon achieve our next milestone of becoming a free cash flow generating company," said founder and Chief Executive Officer (CEO) Vijay Shekhar Sharma in a statement.

Meanwhile, its number of loans rose 137% from the year-ago quarter to at 10.5 million and it said that as of December 2022, 8.1 million borrowers have taken a loan on Paytm's platform, adding 1.4 mn new borrowers during the quarter. Average Monthly Transacting Users (MTU) continued to grow and were 85 mn for the quarter, increasing 32% YoY driven by customer acquisition.

“Paytm share price rebounded on account of improved Q3 earnings. However, the stock's underlying fundamentals are still weak and need a series of improved numbers in future to regain investors confidence. The outlook is gloomy and the stock may again touch the levels of 520 - 500 in near term," said Ravi Singh, Vice-President and Head of Research at Share India.

"As we can see results have come good but should still see the results for at least 2 to 3 quarters more to take any decision. Technically also the stock looks weak, so, avoid in our opinion," said Ravi Singhal, CEO, GCL Broking.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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