Paytm Q1 results preview: Will the new age digital player?

Morgan Stanley predicts stable QoQ revenue growth of 42% YoY overall. It anticipates a consecutive growth of 43% YoY in payment and financial services.

We forecast Payment Processing Charges (PPC) as a proportion of payments revenue to be at 62 per cent, a metric that was 54.0 per cent in 4QFY23 due to UPI incentives," it added. — Axis Capital projects revenue of Rs 1,680 crore, up 38% YoY but unchanged sequentially, and expects an EBITDA loss of Rs 275 crore.

INTRODUCTION

Paytm’s parent business, One97 Communications, will report its financial results for the quarter that concluded on June 30, 2023. Analysts predict that the corporation will announce a range of results for the first quarter of continuing financial.

Following the release of the quarterly earnings, analysts following the stock feel that management commentary regarding operational performance, including being EBITDA positive, targeting positive free-cash flow (FCF), and the scalability of credit to merchants and users, will be crucial to monitor.

Sequentially, we anticipate that adjusted EBITDA margin will increase by 0.6 percentage points to 3% and contribution margin will increase by 4% to 55%. A loss of Rs. 275 crore in adjusted EBITDA is anticipated.

According to Paytm’s operating update from June 2023, financial services disbursements grew significantly in Q1FY24, driven by both higher volumes and larger ticket sizes. The business of payments reported improved GMV growth, which was primarily driven by a rise in payment volumes.

Paytm may record an EBIT loss of Rs 450 crore, rising over 55.7 per cent sequentially. Net loss is projected at Rs 365 crore, more than doubling compared to Q4FY23. Dolat Capital forecasts Paytm’s sales to decrease marginally on a QoQ basis to Rs 2,295 crore, but up 37 per cent YoY.

In Q1, Paytm’s monthly performance showed double-digit YoY growth in GMV, MTU, and loans; as a result, we anticipate increased operational effectiveness. Revenue decline is a result of slower growth in the merchant payment industry. EBIT sequential fall principally brought on the base effect of Rs 49 crore UPI incentive in Q4. PAT Loss anticipated as a result of lower OI and increased tax outlay, it continued.