Paytm is expected to substantially reduce its losses in the first quarter of FY24, driven by improvements in operating leverage. According to analysts, the parent company of Paytm, One 97 Communications, is likely to report a loss of ₹310 crore, marking a 51% decline from the loss of ₹640 crore recorded in the same quarter last year. However, in the Jan-March quarter, the company reported a lower net loss of ₹168 crore.
During Q1FY24, its revenue from operations is anticipated to grow by approximately 43% YoY to ₹2,410 crore. Sequentially, the revenue is expected to remain flat. The EBITDA loss during the quarter is projected to be around ₹275 crore. In the quarter ended June 2023, Paytm’s Merchant Payment Volumes (GMV) reached ₹4.05 lakh crore, exhibiting a YoY growth of 37%.
Paytm continued to expand its loan distribution business during the quarter, with disbursements amounting to ₹14,845 crore, marking a 167% YoY growth, and 1.28 crore loans, representing a 51% YoY growth. The company has been utilizing its offline network of point-of-sale devices to enhance business growth and retention. It aims to strengthen its sales team to deploy more POS machines in tier-2 and 3 cities.
Motilal Oswal Financial Services, a brokerage firm, expects Paytm’s operating profitability to improve, supported by enhancements in contribution margin and operating leverage. The firm foresees steady growth in loan disbursements, GMV, and the number of subscription payment devices, sustaining the current growth trajectory.
Yes Securities also anticipates healthy sequential revenue growth for Paytm, with steady loan disbursements and new device additions. The firm predicts an overall growth in revenue from operations of 14% QoQ. However, it forecasts Payment Processing Charges (PPC) as a proportion of Payments Revenue to be at 62%, compared to 54.0% in 4QFY23 due to UPI incentives.
Paytm’s management commentary on operational performance, achieving positive free-cash flow (FCF), and becoming EBITDA positive will be closely monitored going forward.
As of 1:25 pm, Paytm’s shares were trading 1.30% lower at ₹840.00 apiece on the BSE.