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Dolat Capital Report
One 97 Communications Ltd. reported growth of 39.4% YoY (QoQ: 0.3%; growth of 8.8% QoQ adjusted for UPI incentive in Q4), at Rs 23.4 billion, ahead of our estimate of Rs 22.9 billion, led by monthly transacting user/average revenue per user growth of 23%/13% YoY respectively.
Financial services and merchant payments segments led growth at 9.9%/14% QoQ (adjusted for UPI incentive). Adjusted Ebitda stood at Rs 840 million against Q4: Rs 520 million in Q4, protracted due planned indirect costs.
Paytm's healthy gross merchandise value growth, robust merchant monetisation, optimistic lending growth and improving contribution margins reiterates our positive stance.
Maintain 'Buy' with target price of Rs 1,250, (implies three times on FY25E enterprise value/sales).
What to expect next quarter
We expect a revenue growth to bounce back in Q2, and expect 8.2% QoQ growth. We expect Ebit margin loss to lower by 437 bps QoQ led by continued improvement in direct costs (savings in marketing cost) and indirect costs.
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