Paytm Q3 Results Review - Breakthrough In Adj. Ebitda; Optimisation Without Losing Steam: Dolat Capital

Dolat Capital Report

One 97 Communications Ltd. (Paytm) reported Q3 revenues at Rs 20.6 billion, up 42% on YoY basis (7.7% QoQ) led by monthly transacting users  growth of 32% and average revenue per user growth of 6%.

Growth continued to be led by financial services at 256% YoY (28% QoQ), and seasonally strong commerce business up 37% YoY (48% QoQ).

Payment business impacted by shift of festive season versus last year and user optimisation, up 16% YoY (adjusted for UPI incentive growth would be 29% YoY).

Adjused Ebitda entered green territory, three quarter ahead of guidance, and stood at Rs 313 million. EBITDA margin (excluding employee stock ownership plan) rose to up 2% of revenue from -9% in Q2 FY23.

With robust growth company is benefiting significantly from platform led operating leverage, thus improving its profitability well ahead of its guided timeline of H1 FY24. With next focus on turning free cash flow positive (ideally Q4 itself) Paytm has a strong case for a major re-rating.

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