Shares of One 97 Communications, which operates digital payments and financial services platform Paytm, rallied on following trading session after the company significantly reduced its losses for the quarter ended March. The company's consolidated net loss narrowed to Rs 168 cr. from Rs 761 cr. a year ago and Rs 392 cr. a quarter ago. Paytm's next milestone stands to be free cash flow positive in the near future, with an eye on AI-first offerings this year.
The company declared an revenues earning of Rs 7,990 cr. for FY 2023 which is higher by 61% as compared to the previous fiscal. Consolidated revenue from operations during the January-March quarter grew to Rs 2,334 cr, up 51% year-on-year from Rs 1,467 cr. in the year-ago period. Quarter performance was aided by an increase in GMV, higher merchant subscription revenues, growth of loans disbursed, and full years’ UPI incentives reported during the quarter.
Paytm believes India has potential of at least 10 cr merchants and more than 50 cr payment users in the near future, and will continue to invest in consumer marketing and expand merchant-acquiring sales teams. The company has partnered with large NBFCs and Banks and will continue to focus on the quality of loans distributed through its platform.
Paytm is trading at P/E of (-25.8) with price to book ratio of 3.45.
Total Subscription Merchants
In offline payments, 68 lakh merchants are now paying subscription for payment devices, an increase of 10 lakh in the quarter ended March 2023.
Average Monthly Transacting Users (MTU) for the Q4 of FY23
Consumer engagement on the Paytm App has increased significantly, with average monthly transacting users (MTU) of 9 crore for the quarter, registering 27% growth y-o-y from Mar 22 to Mar 23.
Gross merchant value (GMV) for the Q4
The total merchant GMV processed through company platform for the fourth quarter was Rs 3.62 Lakh Cr ($44 billion), marking a 40% y-o-y growth. Company focus has been on payment volumes that generate profitability, either through net payments margin or direct up sell potential.
Loans disbursed through Paytm for Q4
Loan distribution business has seen an accelerated growth, with total disbursements growing 253% y-o-y to Rs 12,554 Cr ($1,528 million). Companies’ payments consumer and merchant base offers a large addressable market, providing a long runway for growth.
Financial Statements
Balance Sheet
| FY 2023 | FY 2022 | FY 2021 | FY 2020 | |
| Total Assets | 17,965.80 | 17,991.60 | 9,151.30 | 10,303.10 |
| Total Assets Growth (%) | -0.14 | 96.6 | -11.18 | 17.52 |
| Total Liabilities | 4,972.90 | 3,862.10 | 2,635.10 | 2,211.90 |
| Total Liabilities Growth (%) | 28.76 | 46.56 | 19.13 | -25.16 |
| Total Equity | 12,992.90 | 14,129.50 | 6,516.20 | 8,091.20 |
| Total Equity Growth (%) | -8.04 | 116.84 | -19.47 | 39.24 |
| Current Ratio (x) | 3.12 | 3.22 | 3.43 | 3.86 |
| Total Debt to Equity (x) | 0 | 0 | 0.08 | 0.03 |
| Contingent Liabilities | 0 | 362.1 | 421.6 | 133.6 |
Figures in Rs Cr
| QUARTERLY- P&L | Mar-23 | Dec-22 | Sep-22 | Jun-22 | Mar-22 |
| Total Income | 2,464.60 | 2,140.20 | 2,013.60 | 1,781.60 | 1,648.40 |
| Total Income Growth (%) | 15.16 | 6.29 | 13.02 | 8.08 | 7.5 |
| Total Expenses | 2,623.40 | 2,516.90 | 2,556.10 | 2,410.70 | 2,365.00 |
| Total Expenses Growth (%) | 4.23 | -1.53 | 6.03 | 1.93 | 2.61 |
| EBIT | -158.8 | -376.7 | -542.5 | -629.1 | -716.6 |
| Profit after Tax (PAT) | -168.4 | -392 | -571.1 | -644.4 | -761.4 |
| EBIT Margin (%) | -6.44 | -17.6 | -26.94 | -35.31 | -43.47 |
| Net Profit Margin (%) | -6.83 | -18.32 | -28.36 | -36.17 | -46.19 |
| Basic EPS (₹) | -3 | -6 | -9 | -10 | -12 |
Figures in Rs Cr
| ANNUAL- P&L | FY 2023 | FY 2022 | FY 2021 | FY 2020 |
| Total Revenue | 8,400.00 | 5,264.30 | 3,186.80 | 3,540.70 |
| Total Revenue Growth (%) | 59.57 | 65.19 | -10 | -1.09 |
| Total Expenses | 10,130.40 | 7,601.10 | 4,783.00 | 6,138.20 |
| Total Expenses Growth (%) | 33.28 | 58.92 | -22.08 | -20.74 |
| Profit after Tax (PAT) | -1,775.90 | -2,392.90 | -1,696.10 | -2,842.20 |
| Operating Profit Margin (%) | -21.36 | -46.18 | -55.71 | -77.69 |
| Net Profit Margin (%) | -22.22 | -48.1 | -60.52 | -86.63 |
| Basic EPS (₹) | -27 | -38 | -281.16 | -487.15 |
Figures in Rs Cr
Recommendation
Technically, stock has been under pressure over the last year as a result of poor results and operational efficiency. Conditions have recently gotten better as losses appear to be narrowing. Furthermore, technical indicators such as the RSI and MACD are oversold, implying a possible bounce back near the 900 mark. As a result, traders should consider buying this stock at current levels with a price objective of 875-900.
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