Strong revenue trajectory sustains through payments and financial services; better margins in payments to aid Paytm's earnings; resumption in postpaid could add volume ahead, believes ICICI Securities.
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ICICI Securities Report
Our positive stance on One 97 Communications Ltd. remains intact on the back of its significant earnings growth potential, stemming from:
likely growth in payments and loan distribution;
margin expansion prospects from a combination of product upgrades, improving UPI mix towards chargeable products, savings initiatives and operating leverage; and
presence of optionality through possible offerings, including traction in postpaid/wallet/international complemented by its diverse presence across the payment ecosystem.
Given these levers, we consider risk-reward as favourable.
There is also better success now in terms of product innovations, customer/merchant retention and free cash flow maximisation.
Regulatory challenges, including its impact on loan growth, remain key risks for Paytm shares.
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