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Yes Securities Report
One 97 Communication Ltd.'s management calls a bottom, perhaps a tad surprisingly, for loan distribution growth:
The key reason for the expectation of improved growth in personal loans is that the company now has a large personal loan user base, which has seen maturing customers. About Rs 3- 4 billion personal loan matures every month and is available for upsell and hence, the company is seeing improved renewal opportunity. Personal loans would remain muted for two more quarters and a 30-40% YoY growth can be expected.
Merchant loans growth will be healthier and in excess of 50-60%. On a blended basis, total credit growth would be 40-50%.
While the consumer payments business is slow, the merchant payments business remains robust:
Revenue for consumer payments grew 5.5% YoY to Rs 5.79 billion for the quarter. In contrast, revenue from merchant payments ramped up 47.6% YoY to Rs 9.21 billion.
Cloud revenue has slowed whereas commerce revenue has been healthy:
De-growth in value added services has dragged the overall cloud revenue growth to 3.6% YoY but one should regard this slowdown as an aberration. The commerce gross merchandise value is up 39% YoY driven by all-round growth in travel, entertainment, deals and gift vouchers.
We maintain a less-than-bullish ‘Add’ rating on Paytm with a revised price target of Rs 1100:
We value Paytm at 5.2 times FY25 price/sales to arrive at our price target of Rs 1100.
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