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Motilal Oswal Report
One 97 Communications Ltd. (Paytm) reported a net loss of Rs 2.2 billion (versus estimate of Rs 2.6 billion loss) in Q3 FY24. Total revenue grew 38% YoY/13% QoQ to Rs 28.5 billion (broadly in line), driven by healthy growth in gross merchandise value and an increase in merchant subscription revenues, partly offset by some moderation in disbursements.
Net payment margin grew 63% YoY/6% QoQ to Rs 7.5 billion, which, along with healthy financial services and commerce revenue, resulted in contribution margin of ~53% (versus estimate of 55%).
We increase our adjusted Ebitda earnings estimate by 19%/2% for FY24/FY25, and we expect Paytm to turn profitable in FY26 and expect it to report Ebitda of Rs 3.6 billion by FY25.
We retain our 'Buy' rating on the stock.
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