Shares of Paytm-parent One 97 Communication Ltd will be in focus today, May 7 after the payments platform announced financial results for the January to March quarter for the fiscal year 2025-26.
Paytm's net profit for the fourth quarter dropped 18.2% sequentially, according to an exchange filing on Wednesday. In the preceding quarter, the bottom-line had surged as payments volume shot up during the festive season.
The company reported a consolidated bottom-line of Rs 184 crore in Q4, against Rs 225 crore in the previous quarter. Revenue from operations rose 3.2% to Rs 2,264 crore from Rs 2,194 crore in Q3. Paytm's earnings before interest, taxes, depreciation and amortisation fell 5.4% to Rs 132 crore from Rs 156 crore, and margin narrowed to 5.8% from 7.1% quarter-on-quarter.
Brokerages shared mixed review on Paytm after its Q4 results, with Citi and Jefferies reiterating 'Buy' ratings on the stock. Citi has set a target price of Rs 1,375, marking a 23,8% upside from the closing price of Rs 1,110.6. The brokerage flagged higher marketing expenses, which weighed down on earnings. Citing revenue momentum, Jefferies has set a target price of Rs 1,350, a 21% upside.
Citi on Paytm
- Brokerage maintained 'Buy' rating with target price of Rs 1,375.
- Q4 core payment margins (ex-subsidies) continue to grind up.
- Profits and EBITDA missed estimates on higher marketing spends as Paytm stepped up promotional spending.
- Core payment margins continue to grind higher.
- Merchant business remains robust and solid growth in financial services sustains.
- Operating leverage continues to play out as fixed costs remain reined in.
Jefferies on Paytm
- Jefferies maintained 'Buy' rating with target price of Rs 1350.
- Revenue momentum covers-up for missing UPI incentive.
- Revenue growth of 18% was led by financial services and comes despite no PIDF and UPI incentives.
- Contribution margin is normalising, but operating efficiency lifted adjusted EBITDA margins to 8%.
- Paytm's revenue momentum can support earnings, despite risk to UPI incentives.
ALSO READ: Paytm Q4 Results: Net Profit Slips After Festive Season Peak, Revenue Sees 3% Uptick
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