Paytm - Postpaid Business On Cautious Route; Loan Business Pivot To Higher Ticket Size: Dolat Capital

Dolat Capital Report

One 97 Communications Ltd. apprised on its loan distribution business (~22% of revenue), in light of:

1. current macro environment, and

2. Reserve Bank of India’s November-2023 risk-weight update on consumer credit exposure for lenders.

Noting above two factors and a consultation with lender partners, Paytm shared that it would follow a cautious approach for distribution of sub Rs 50,000 ticket loans that accounts nearly 38% of its loan book.

Hereon focus would move towards higher ticket sized personal loans (added Rs 0.2-0.7 million segment), growing Merchant loans (micro, small and medium enterprise), and expanding lending partner base (three more in next six months).

While attune our estimates to this revised outlook, but remain upbeat as Paytm continues to prioritise portfolio quality, improving lender partner trust while also adding new partners consistently.

Maintain 'Buy' with target price of Rs 1,320 (implies ~four times of FY26E enterprise value/sales).

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