Paytm: Paytm Q1 results preview: Revenue may fall by up to 36%, net loss likely to widen

One 97 Communications which operates payments platform Paytm, is expected to report a net loss between Rs 1,013 crore and Rs 840 crore for the quarter ended June 2024 according to estimates by a couple of brokerages. The revenue for the reporting quarter is expected in the range of Rs 1,532 crore and Rs 1,490 crore.

The revenue hit could be to the tune of 34.5%-36%, the estimates by Motilal Oswal Financial Services (MOFSL) and Yes Securities said.

The fintech company had reported a net loss of Rs 357 crore in the corresponding quarter of the last financial year while its revenue in Q1FY24 stood at Rs 2,342 crore.

The company has been reeling under regulatory actions first by the Reserve Bank of India and the latest one comes from the market regulator Securities and Exchange Board of India (Sebi). In the former case, RBI put an embargo on Paytm Payments Bank, directing Paytm to stop all forms of banking services — including accepting deposits and processing of payments. In the latter case, One 97 Communications received an administrative warning letter from market regulator SEBI. The regulator stated that certain transactions in FY22 between Paytm and the now defunct Paytm Payments Bank were conducted without approval from the company’s audit committee or its shareholders.

The company will be announcing its earnings for the April-June quarter on Friday, July 19.

Here’s what brokerages recommended:Yes Securities

Yes Securities expects Paytm’s revenue in Q1FY25 at Rs 1,532 crore which will be a 34.6% decline on the ToY basis and 32.4% on the quarter-on-quarter basis. The net loss for the reporting quarter is expected to widen to Rs 1,013 crore. The Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) is expected to remain negative at Rs 925 crore.

“We assume 40% QoQ de-growth in payments services to consumers, 35% QoQ de-growth in payments services to merchants and 30% QoQ de-growth in financial services and others and arrive at an overall de-growth in revenue from operations of 32% QoQ,” Yes said in a brokerage note.

“We forecast Payment Processing Charges (PPC) as a proportion of payments revenue to be at 55.5%, a metric that was 46% in 4QFY24, as it received UPI incentive in 4Q. We arrive at a Total Expenses (ex PPC) growth of 7% QoQ, compared with a de-growth of -12% in 4QFY24, resulting in an EBITDA margin (ex Other Income and after ESOP cost) of -60.4%, a deterioration of 5,050 bps QoQ,” Yes note further said.

Motilal Oswal

Motilal Oswal sees a 36% YoY decline in company’s revenues at Rs 1,490 crore while a net loss for Q1FY25 at Rs 840 crore. It estimates a 7% YoY decline in gross merchandise value (GMV) in 1QFY25, amounting to Rs 4.3 trillion.

The contribution profit is estimated to decline 51% YoY to Rs 640 crore for 1QFY25. The contribution margin is likely to be 43% while adjusted operating loss is estimated to be Rs 490 crore in the said quarter.

Paytm’s losses widened to Rs 550 crore in the fourth quarter ended March 2024. The same stood at Rs 169 crore in the last year quarter. Revenue from operations in the reporting quarter fell 3% year-on-year (YoY) to Rs 2,267 crore, compared with Rs 2,334 crore in the same quarter of the previous year.

One 97 Communications’ Founder and Chief Executive Officer (CEO) Vijay Shekhar Sharma is company’s Significant Beneficial Owner (SBO) with 19.4% stake in Paytm which he holds in his personal capacity and through an overseas entity Resilient Asset Management BV. While Sharma directly holds 9.1% stake, his holding via Resilient stands at 10.3% according to the latest shareholding data available on the BSE.

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