Paytm - Macro Headwinds Compelling Growth Moderation: Motilal Oswal
Asset quality metrics steady; cutting disbursement, Ebitda estimates
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Motilal Oswal Report
One 97 Communications Ltd. mentioned that the scale-down in postpaid business is primarily prudential in nature and is to preempt any asset quality issues in coming quarters.
Asset quality metrics remain steady and the pick-up in high-ticket personal loans and merchant loans, along with the increase in the number of lending partners, should support steady growth in the medium term.
While the longevity of these measures and the outlook in low-ticket unsecured loans remains under watch, we trim our FY24/FY25 disbursement estimates by 15%- 18%, resulting in an 11-16% cut in our adjusted Ebitda over FY24E/FY25E.
We value Paytm at 20 times FY28E EV/Ebitda and discount the same to FY25E at a discount rate of ~14%. We thus value the stock at Rs 1,025, which implies 4.5 times September25E price/sales.
We maintain our 'Buy' rating on the stock.
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