Paytm Q2 net loss widens to Rs 571 crore: Key highlights

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Paytm Q2 Earnings

One 97 Communications, which runs the fintech platform Paytm, has posted a consolidated loss of Rs 571.5 crore in the July-September 2022 period. The loss has widened from Rs 473.5 crore in the same period last year. Here are the major highlights:

Paytm July-September 2022 earnings: Highlights

Loss widened: Though loss on a YoY basis widened by 20.77% it has contracted on a sequential basis. In Q1 FY23, the loss of this fintech company stood at Rs. 644.4 Crores. This is mainly due to growth in loan distribution and payment profitability. 

Subscriptions: In this quarter, there were 1.1 million new merchants subscribed to Paytm payment devices. The total merchant subscription as per payment devices stood at 4.8 million as of 30th September 2022. On a YoY basis, there is an increase of 3.5 million payment devices which suggests the strong growth of the company. 

Loans disbursed: The loan disbursal business of Paytm has witnessed significant growth in the past year. There has been a 482% increase in loan disbursal business on a YoY basis and the current value of loans disbursed stood at Rs. 7313 crores as of 30th September 2022. The number of loans disbursed also went up by 224% on a YoY basis to 9.2 million. Paytm disburse personal loans, merchant loans and BNPL services. If you see segment-wise, then the growth in personal loan disbursal was highest in this quarter. It went up by 736% and the total value of loans disbursed under this segment stood at Rs. 2055 crores. The average size of the loan is around Rs. 110000 with an average duration of repayment tenure of 14 months. BNPL services of the firm added Rs. 4050 crores of revenue and it is up by 449% from the July-September quarter of the previous year. 

EBITDA before ESOP cost improved: The digital finance company has been able to improve its EBITDA before ESOP cost to a negative Rs. 166 crores from negative Rs. 426 crores a year back in the corresponding quarter. There has been an improvement of 61% on a YoY basis. The company anticipates that the EBITDA before ESOP costs to turn positive or be profitable by Q2FY24. 

Indirect expenses reduced: Paytm has been successfully reducing its indirect costs as a percentage of the revenue over time. From 63% of the revenue in Q2FY22, the indirect cost has become 53% of the revenue in this quarter ended on 30th September 2022. 

GMV and MTU increased: The GMV increased to Rs. 3.2 lakh crores in this quarter from Rs. 2 lakh crores in the corresponding quarter, last year. There has been a growth of 63% in these 12 months. Similarly, MTU increased by 39% this year. 

Share performance: Paytm share price dipped drastically over the first 6 months of the previous year. It was around Rs. 1550 a year back, that is in November 2021, from which it dropped to Rs. Rs. 524 in March 2022. The drastic downfall in the share price was due to an increase in the loss of the company. In May 2022, it touched an all-time low of Rs. 510.05 then again picked up as the company started reducing its losses in the April-June, 2022 quarter. The share price jumped by 1.1% on Monday morning upon the release of the quarterly results. Paytm share closed at Rs. 649.8 on Friday, 4th November, which opened at Rs. 657.05 on Monday, 7th November 2022. 

Brokerage Radar: Morgan Stanley suggests the investors maintain equal weight with a target price of Rs. 785 as the revenue for Q2 increased as expected with strong growth of GMV mainly due to an increase in loan disbursal. MS also indicated an improvement in the contribution margin on a QoQ basis while the Adj margin dropped 9%.   The current market price is Rs. 652. However, CLSA maintained its ‘Sell’ call for Paytm with a target price of Rs. 650 mainly due to higher Opex margin for the quarter and pre-IPO investor lock-in opening on 15th November 2022.