Shares of One97 Communications, the parent company of fintech player Paytm, cracked another 3 per cent during the trading session on Monday, extending its weakness after the June 2024 quarter results announced on Friday, July 19. However, the brokerage firms have a mixed opinion on the stock after the quarterly earnings.
Shares of One97 Communications Ltd tumbled more than 3.31 per cent to Rs 444.30 on Monday, with its total market capitalization falling below Rs 29,000 crore. The scrip had settled at Rs 458.70 crore in the previous trading session on Friday.
One 97 Communications reported consolidated net loss widened two-and half times to Rs 839 crore in Q1FY25 from Rs 357 crore a year ago, as the company continues to cope with the impact the RBI curbs shutting the payments bank business. Sequentially, the loss was up 50 per cent from Rs 550 crore in the March 2024 quarter.
The fintech firm's revenue from operations declined 36 per cent on a year-on-year (YoY) basis to Rs 1,502 crore in the quarter ended on June 30, 2024, as against Rs 2,342 crore in the year-ago period. Paytm's EBITDA before ESOP loss of Rs 545 crore for the reported quarter.
Paytm is aiming to deliver quarterly profitability within this financial year itself. This profitability is on Ebitda before ESOP basis and without considering UPI incentive. The company is at the tail-end of migration to other banks. Once this is complete, it would be able to go to the NPCI to allow customer addition. This should happen in the current financial year, said YES Securities.
Revenue from Payments services to consumers was down 85 per cent YoY, revenue from payments services to merchants was down 4.9 per cent YoY and revenue from financial services business was down 46 per cent YoY, it said. "We maintain a recently-assigned 'buy' rating on Paytm with a revised price target of Rs 550, valuing it at 3.3times FY26 P/S to arrive at target," it adds.
Paytm reported a net loss amid a sharp decline in revenues, a slower disbursement rate and slightly elevated indirect expenses. Revenue from payments services to consumers plunged 85 per cent YoY, while merchant revenue saw a marginal decline, said Motilal Oswal. Total revenue declined 36 per cent, while GMV grew 5 per cent YoY, which were in line, it said
"Net payment margin declined 41 per cent, which resulted in a dip in contribution margin to 50.3 per cent. We cut our contribution profit estimates by 8 per cent and 3 per cent for FY25 and FY26 and estimate Paytm to turn Ebitda positive by FY27," it added, retaining its 'neutral' rating on the stock with a target price of Rs 500.
Paytm reported weak, but expected 1Q25 results. Ebitda turned negative as the impact of disruptions was seen for the full quarter. Decline in revenue was majorly due to reduction in revenue from Payment services to financial services revenue as the value of loans disbursed declined even as disbursements in merchant loans picked up, said JM Financial.
"Net payment margin declined to 9 basis points due to impact on high margin products and temporary disruption in operating metrics. We believe on-boarding of new customers and revival of high margin products in payments business is contingent on regulatory approvals, seamless migration of accounts and smooth integration," it added with a 'sell' rating a revised target price of Rs 390.
Among the other brokerage firms, Bernstein has maintained 'outperform' with a target price at Rs 600, while Jefferies has maintained 'hold' with a target price at Rs 420. Macquarie has maintained 'underperform' on Paytm with target price at Rs 325 per share.
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