Paytm Q3 Review - Merchant Business Scales; Financial Services Healthy, Losses Trim Further: Dolat Capital

Dolat Capital Report

One 97 Communications Ltd. (Paytm) reported revenue growth 13.2% QoQ (our estimate: 10.7%), led by monthly transacting user/average revenue per user growth of 5.3/7.5% sequentially boosted by strong seasonality.

Merchant business and financial services grew by 17.4/6.3% QoQ where merchant business saw strong device addition (plus 1.4 million devices QoQ), while fin services growth was led by improved take rates (~15 basis points QoQ) covering for moderation from postpaid. Postpaid loan were down 17% taking overall loans down 4% QoQ.

Adjusted Ebitda improved to Rs 2,185 million (last quarter: Rs 1,536 million), boosted by higher festivities led Revenue growth, moderate indirect costs, and despite seasonality led dip in contribution margin (-328 bps)

Continued strength in across segments, early success in high ticket size loan distribution, healthy operational performance reiterates our positive stance.

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

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