Paytm stock surges over 8% as Q3 loss narrows

Shares of One97 Communications, the parent company of Paytm, surged as much as 8.01% to hit an intra-day high of ₹566 apiece on the Bombay Stock Exchange (BSE), two days after the company reported a net loss of ₹392 crore for the October to December quarter. With this, the company's losses have narrowed during the quarter under review against ₹779 crore in the same period a year ago. 

On Monday, the share price of One97 Communications opened higher at ₹550 against the closing price of the previous session at ₹524.90. At 12:38 pm, it was trading 7.54% higher at ₹564.50 on the BSE. In the past one year, the company’s shares have declined 41.26%, while in the last three months it declined 13.89%. During today's session, the company's market capitalisation stood at ₹36,388 crore, with 1,82,603 shares exchanging hands on the BSE against the two week average of 1.67 lakh shares. 

During the quarter, the company’s revenue surged 42% year-on-year (YoY) at ₹2,062 crore, driven by increase in merchant subscription revenues, growth in loan distribution and momentum in commerce business. Of this, the company’s payments revenue grew 21% YoY at ₹1,197 crore, whereas the revenue for its financial services business grew 257% at ₹446 crore, thus accounting for 22% of total revenues. 

During the quarter, the company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) before ESOP improved by ₹452 crore YoY. 

"I am very happy to share that our company has achieved this milestone of EBITDA before ESOP cost profitability in the December 2022 quarter itself. This is three quarters ahead of our guidance," Vijay Shekhar Sharma said in a statement.

During the quarter, the number of loans stood at 10.5 million, up 137% YoY. As of December 2022, 8.1 million borrowers have taken a loan on the company’s platform, adding 1.4 million new borrowers during the quarter. In the December quarter, average monthly transacting users (MTU) surged 32% YoY at 85 million, driven by customer acquisition through unified payment interface (UPI) and multiple use cases on our platform.

"With continued focus on expanding monetisation in our payments business, merchants paying subscription for payment devices were 5.8 million in the quarter, an increase of 3.8 million YoY. We see sustained traction in device deployment with deployments of 0.9 -1 million devices every quarter," the company said.

During the quarter under review, the company's gross merchandise value (GMV) for its payments business grew by 38% YoY to ₹3.5 lakh crore. "Our payment processing margin this quarter was within the range of 7-9 basis points (bps) of GMV as indicated in December 2022. This is proforma for Q3 FY 2023 UPI incentive, and despite the inclusion of interchange costs for Paytm Postpaid," the company said.

In Q3 FY2023, the number of postpaid loans disbursed grew 134% YoY, while the value of postpaid loans grew 337% YoY. The number of personal loans disbursed grew 309% YoY in Q3 FY 2023, while the value of personal loans grew 468% YoY to ₹2,931 crore. The number of merchant loans disbursed grew 253% YoY in Q3 FY 2023, while the value of merchant loans grew 285% YoY to ₹1,825 crore.