One97 Communications Ltd. share price target

One97 Communications (Paytm) has reported a strong FY23, best underlined by an increase of Rs13.4bn in EBITDA before ESOPs during the year. This was a combination of an increase in payment revenue (42% YoY), financial services (252% YoY through credit disbursement growth from Rs76bn in FY22 to Rs354bn in FY23), cloud (24% YoY) and commerce (64%) as well as an increase in contribution margin (~400bps to 49%) and controlled indirect costs (Rs10bn level for last 4 quarters).

One 97 Communications (Paytm) during its analyst meet yesterday (1st Dec’22) reiterated its continued focus on improving profitability.

One 97 Communications (Paytm) continues to improve its revenue and margin profile, evident in narrowing of consolidated loss at Rs5.7bn in Q2FY23 (vs loss of Rs6.5bn in Q1FY23).

One 97 Communications (Paytm) management team hosted a call to share their
observations and assessment on business implication regarding the regulatory framework suggested by the RBI for digital lending.

One 97 Communications Ltd (Paytm) continues to sequentially improve its margins as
evidenced in its reported consolidated loss of Rs 6.5bn in Q1FY23 being lower than the
loss of Rs 7.6bn in Q4FY22.

RBI has directed Paytm Payments Bank (PPBL), an associate of One 97 Communications (OCL or Paytm), to temporarily halt onboarding of new customers, via a letter dated 11th Mar’22. The embargo will have an adverse impact on signing up users for new PPBL wallets or savings / current accounts, until further notice.

One 97 Communications’ (OCL or Paytm used interchangeably in the report) two-sided digital ecosystem of 64.4mn average monthly transacting users (MTUs) (as at Dec’21) from >350mn consumer base and over 24.9mn merchants is core to its unit economics.