Paytm (One 97 Communications) is expected to report that its revenue doubled year-on-year in the April-June quarter, when the fintech behemoth reports its fiscal first quarter results later this week. Paytm is among the unicorns that recently entered Dalal Street, and are yet to turn profitable. However, with the earnings expected to remain strong, analysts believe Paytm remains on its path to profitability and could achieve EBITDA profitability by end of FY24. Paytm stock price has been a major talk point on Dalal Street since its listing. Paytm shares are down 60% from the IPO price to now trade at Rs 756 apiece.
Revenue to double in Q1
Goldman Sachs in its results preview note said that a third consecutive quarter of 90% year-on-year revenue growth for Paytm. Analysts at Goldman Sachs believe this growth will be aided by a 305% revenue growth in the financial services segment of the company. Meanwhile, Payments revenue is pegged to grow 74% from the same period last year. “Our payments revenue growth forecast of 74% YoY in 1QFY22 is higher than our estimate of Paytm’s non-UPI GMV growth of 51% YoY, a function of our expectation of higher take rate YoY (but some decline QoQ), and increasing revenue contribution from devices. However, given the continued mix shift towards UPI, we expect payments revenue for Paytm to grow slower vs overall GMV growth,” Goldman Sachs said.
A more bullish outlook is projected by domestic brokerage firm Yes Securities, who believe Paytm could more than double its revenue in the April-June quarter. “We arrive at an overall growth in Revenue from operations of 17.5% QoQ (103.3% on-year). We forecast an improvement in Payment Processing Charges (PPC) as a proportion of Payments Revenue at 72%, a metric that was 74% in 4QFY22,” Yes Securities said.
Impact of RBI’s ban on Paytm Payments Bank
Analysts at Goldman Sachs project Paytm’s monthly transacting users has risen to 76 million as of June 2022, against 70 million as of February 2022, suggesting limited/no impact on user acquisition of the RBI’s ban on Paytm Payments Bank in March. “…. we believe this should help allay investor concerns on the stock,” they added. Paytm Payments Bank is estimated to have seen 51% on-year growth in non-UPI GMV growth in the first quarter against 52% on-year in the January-March quarter. This growth will be broadly in line with the underlying industry growth of 56%, analysts said. On other hand, Yes Securities said that RBI’s embargo on customer additions for the Payments Bank on 11th March would have its impact.
Loan disbursal growing strong
Both Yes Securities, as well as Goldman Sachs, expect Paytm’s loan disbursals have grown strongly in the fiscal first quarter. “Loan disbursals for Paytm saw 56% on-quarter growth in April-June period to Rs 56 billion (US$750 mn); as of June 2022, Paytm is annualising US$3.2 bn in disbursals (across postpaid, personal loans and merchant loans), vs US$400 mn in Jun ‘21,” Goldman Sachs said. The global brokerage firm has raised its FY23E-25E disbursals estimate for Paytm by 3-12% on the back of strong momentum.
Goldman Sachs believes Paytm will report a revenue of Rs 1,690 crore and Adjusted EBITDA margin to narrow to -19% with Adjusted EBITDA at Rs -320 crore. Yes Securities expects revenue will come in at Rs 1,810.6 crore and EBITDA will be at Rs -720.7 crore. Paytm is projected to report a net loss of Rs -721.9 crore.