One 97 Communications reported a net profit of Rs 225 crore (18% miss to our estimate of Rs 270 crore), owing to higher indirect expenses and taxes, even as revenue growth was robust despite flat QoQ gross merchandise value growth. Strong revenue growth of 28% YoY/8% QoQ to Rs 2,650 crore (in line) was aided by steady growth in merchant base, number of transactions, device subscription, and payment margin expansion.
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Motilal Oswal Report
According to Motilal Oswal, One 97 Communications Ltd. reported a steady quarter, supported by robust revenue growth and disciplined management, even as PAT was a miss due to higher indirect expenses and taxes. Management expects indirect expenses to grow at less than half the rate of revenue.
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The company continues to make healthy progress toward sustainable profitability and improving operating leverage, even while gross merchandise value was flat QoQ owing to festive season getting pushed to Q3.
Contribution margin stood healthy at 56%, while the software, cloud, data center expenses and taxes were higher than expected.
On the proposed MDR on select UPI transactions less than Rs 2,000, the company has indicated ~2.5 basis points rise in overall PPM.
The brokerage has aligned its earnings estimates to factor in potential MDR impact on UPI, building in a PAT of Rs 1,040 crore/Rs 2,650 crore in FY27/28E.
Motilal Oswal has valued Paytm at Rs 1,850, based on 38 times FY28E EV/Ebitda and has reiterated Neutral rating on the stock.
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