Although Paytm's Rs 156 billion cash cushion offers comfort, consistent delivery is critical for sustainable shareholder returns.
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Motilal Oswal Report
One 97 Communicationsl Ltd. is making steady progress toward profitability, underpinned by its strategic shift toward financial services and disciplined cost management.
With financial services expected to contribute 27% of revenue by FY28E (~25% in FY24), the business model is becoming more margin-accretive. An estimated revenue CAGR of 22% over FY25-28E (to Rs 126 billion) and continued merchant-centric growth should help the company achieve Ebitda breakeven by FY26E.
Key catalysts include loan growth via FLDG-backed partnerships, continued thrust on merchant expansion, and exemplary cost control. However, regulatory overhangs, market share volatility in UPI, and execution risks in the rapidly evolving digital payment space keep us cautious.
Although Paytm's Rs 156 billion cash cushion offers comfort, consistent delivery is critical for sustainable shareholder returns.
We maintain a Neutral rating with a revised target price of Rs 1,000, reflecting 20.0x FY27E Ebitda, balancing near-term uncertainties while maintaining long-term stability.
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