Shares of One97 Communications, the parent company of Paytm, fell over 3% to a day's low of Rs 953 on Monday, despite posting strong second-quarter financial year 2024 (Q2FY24) results. The company reported substantial increases across several key performance metrics, including merchant subscription revenues, merchant payment volumes, and loan disbursements via Paytm Postpaid, Personal Loans, and Merchant Loans.
The firm's payments and financial services revenue saw a significant 32% year-on-year (YoY) leap 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 increased by 28% YoY to Rs 1,524 crore. Moreover, the net payment margin expanded by an impressive 60% YoY to Rs 707 crore.
Financial services revenue surged by a notable 64% YoY to Rs 571 crore in Q2FY24. During the same period, One97 Communications distributed loans worth Rs 16,211 crore, marking a YoY increase of 44%.
According to InvestingPro data, the company's Market Cap stands at 69.49M USD and it has a P/E Ratio of 7.51. The company's Revenue for LTM2023.Q2 is 55.28M USD, with a Revenue Growth of 1.59 %. However, the Revenue Growth (Quarterly) for FY2023.Q2 has decreased by -33.07 %. The Gross Profit for LTM2023.Q2 is 23.14M USD, with a Gross Profit Margin of 41.86 %.
Despite the dip in share price on Monday, several major financial institutions maintained positive outlooks for the company. CLSA maintained a 'buy' call with a target price of Rs 1,200, indicating an upside of over 20% from the previous Friday's close. Similarly, Citi and Jefferies also issued 'buy' calls with a target price of Rs 1,300. Morgan Stanley (NYSE:MS), on the other hand, held a more cautious stance with an equal-weight rating and a target price of Rs 830.
InvestingPro Tips suggests that Paytm's management has been aggressively buying back shares, and the company is a prominent player in the Financial Services industry. However, it's worth noting that the revenue growth has been slowing down recently, and stockholders have been receiving poor returns on book equity. The company has also been trading at a high Price / Book multiple of 1.7 according to InvestingPro data. For more insights like these, consider exploring the InvestingPro product that includes additional tips.
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