Paytm - Stabilise Phase Done, Ready For Momentum; Reiterate 'Buy': Dolat Capital

Dolat Capital Report

One 97 Comunications Ltd. is poised for recovery after the disruption caused by Paytm Payments Bank Ltd. and Postpaid impact. Despite challenges, the company continues to possess large number of use cases (serving both on need and want), huge customer base (MTUs of 78 million plus, ATU of ~150 million+) and robust tech platform.

Paytm remains in a bright spot of continued rapid growth in digital payments in India. We believe that the company has potential for growing its revenues multi-fold over next decade and is expected to deliver steadily growing profits FY26E onwards.

We believe that DCF valuation is an ideal tool to value the real long-term potential of this business. The growth momentum is factored in two stage projections wherein-

1. in the first stage we expect a revenue CAGR of 28% over FY25-FY30E and

2. in the second stage we expect a revenue CAGR of 18% over FY30-FY40E.

We expect the business to turn PAT profitable in FY26E and reach a steady state Ebit margin of ~16.1% over FY31-FY40E. We have factored in cost of capital of 12% and terminal growth rate of 2% (beyond FY40E) in our DCF assumptions.

View:

We maintain our ‘Buy’ rating on the stock with revised target price of Rs 920 (implies 4.6 times/3.6 times on FY26/FY27E enterprise value/sales).

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