Paytm Share Soars 5% on Sustained Growth in Q4

Paytm surged more than 5% as its Q4 losses narrowed, bringing shares up 50% in 6 months.

On May 8, Paytm’s shares were trading 5% after the company’s net loss narrowed to Rs 168 crore in the March quarter of FY23 from Rs 761 crore last year.

Revenue from operations rose 52% YoY to Rs 2,335 crore in Q4FY23, with GMV going up 40% to Rs 3.62 lakh crore, the company mentioned on May 5.

The firm expanded its EBITDA before ESOP (employee stock options) costs, with UPI incentive for Q4, to Rs 101 crore, besides Rs 368 crore in Q4 FY22.

The contribution profit and operating leverage improvement allowed Paytm to get EBITDA before ESOP cost at Rs 176 crore, reporting a reviewed EBITDA of Rs 602 crore YoY.

For FY23, Paytm’s revenue growth soared 61% YoY to Rs 7,990 crore, led by payments monetisation with the mounting scale of the loan distribution business.

The contribution margin sustained from 30% in FY22 to 49% in FY23, chiefly due to better payment profitability with a growing high-margin loan distribution business. FY23 net loss tumbled to Rs 1,777 crore compared to Rs 2,396 crore in FY22.

JPMorgan gave an “overweight” call with a target price (TP) of Rs 950, up 37% from current levels.

The consistent execution on profitability will keep on track for acquiring an attractive profit pool and expects free cash flow and profit after tax break even in FY25. Paytm can become the first Indian B2C stock to trade on profit instead of revenue multiples.

The firm’s market capitalisation rose 30% in FY22 and over 35% this year. At 10.24 am, the stock traded 4.5% higher at Rs 720.65, and the benchmark Nifty rose 0.91% higher at 18,233.10 bps.

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