Paytm Q2 Results Review - Sustained Recovery; TPAP License To Drive Growth: Dolat Capital

Dolat Capital Report

Oen 97 Communications Ltd. reported revenue growth of 10.5% QoQ (our estimate: 8.3%) with monthly transacting users decline of 9%, but average revenue per user growth of 21.4% QoQ. Payment Services and Financial Services grew 7% and 34% QoQ respectively.

Adjusted Ebitda loss reduced dramatically to Rs 1.85 billion (our estimate: Rs 2.7 billion), led by revenue uptick and strong cost management, covering up even for upfront charge on DLG (~Rs 650 million).

Management continues to guide positive adjusted Ebitda by Q4 FY25 (excluding UPI incentive).

Q2 witnessed a sharp recovery in performance and now with NPCI approving new UPI client onboarding under third-party application provider license should pave path for MTU revival.

We have kept our growth/operating profit margin estimates largely unchanged adjusted for divestment of entertainment biz.

Maintain ‘Buy’ rating with DCF based revised target price of Rs 960 (implies ~four times on FY27E enterprise value/sales and about 50 times on FY27E earnings).

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