Shares of ONE97 Communications, the parent company of Paytm, experienced a 3% drop to reach a day’s low of Rs 953 on Monday, despite the company’s impressive second-quarter financial results for the fiscal year 2024 (Q2FY24). Notably, the company reported substantial growth in key performance indicators, such as merchant subscription revenues, merchant payment volumes, and loans disbursed through Paytm Postpaid, Personal Loans, and Merchant Loans.
In Q2FY24, the firm’s payments and financial services revenue demonstrated a significant 32% year-on-year (YoY) increase, amounting to Rs 2,519 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) before the cost of employee stock ownership plans (ESOPs) rose from Rs 84 crore in the first quarter of FY24 (Q1FY24) to Rs 153 crore in Q2FY24. Payments revenue also experienced a YoY growth of 28%, reaching Rs 1,524 crore. Furthermore, the net payment margin expanded impressively by 60% YoY to reach Rs 707 crore.
The financial services sector also surged, with a notable 64% YoY increase in revenue, which reached Rs 571 crore in Q2FY24. During this period, ONE97 Communications disbursed loans worth Rs 16,211 crore, marking a YoY increase of 44%.
According to InvestingPro data, the company’s Market Cap is currently valued at 69.49 million USD, with a P/E Ratio of 7.51. The company’s Revenue for LTM2023.Q2 stands at 55.28 million USD, and it displays a Revenue Growth of 1.59%. However, the Revenue Growth (Quarterly) for FY2023.Q2 decreased by -33.07%. The Gross Profit for LTM2023.Q2 is 23.14 million USD, with a Gross Profit Margin of 41.86%.
Despite the decline in share price on Monday, several major financial institutions continue to hold optimistic views on the company’s prospects. CLSA maintains a ‘buy’ rating with a target price of Rs 1,200, indicating an upside potential of over 20% from the previous Friday’s closing price. Similarly, Citi and Jefferies have also issued ‘buy’ recommendations, with a target price of Rs 1,300. In contrast, Morgan Stanley is adopting a more cautious stance, assigning an equal-weight rating and a target price of Rs 830.
