Paytm, the Indian financial services giant, reported a 32% year-on-year (YoY) rise in Q2FY24 revenue to Rs 2,519 Cr ($340 million), driven by increased merchant subscription revenues, payment volumes, and loan disbursements. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) before ESOP cost improved to Rs 153 Cr ($20.6 million) from Rs 84 Cr ($11.3 million) in Q1FY24.
The company's payments revenue grew by 28% YoY to Rs 1,524 Cr ($205.7 million), with net payment margin expanding by 60% YoY to Rs 707 Cr ($95.4 million). Meanwhile, financial services revenue saw a significant surge of 64% YoY to Rs 571 Cr ($77 million) in Q2FY24.
In terms of lending activities, Paytm distributed loans worth Rs16,211 Cr ($2.19 billion), marking a YoY increase of 44%. This benefited 1.18 Cr unique borrowers until September 2023.
Paytm, a prominent player in the Financial Services industry according to InvestingPro Tips, has also expanded its partnership portfolio by onboarding Tata Capital. It now collaborates with nine bank and non-banking financial company (NBFC) partners across its lending products and plans to add more in the future.
Paytm's commerce cloud revenue grew by 12% YoY to Rs423 Cr ($57 million) in Q2FY24. This includes various services such as travel, movie, entertainment ticketing, deals and gift vouchers, advertising, co-branded credit cards, marketing cloud, and loyalty business.
The company's merchant base grew to 3.8 Cr with an average Monthly Transacting Users (MTU) of 9.5 Cr, up nearly 19% YoY. Merchant payments volume (GMV) grew 41% YoY to Rs4.5 Lakh Cr ($60.7 billion) this quarter.
Despite a dip in share price, CLSA, Citi, and Jefferies issued 'buy' calls with target prices from Rs 1,200 to Rs 1,300, while Morgan Stanley gave an equal-weight rating with a target price of Rs 830. As per InvestingPro data, Paytm's Market Cap stands at $67.92 million, its P/E Ratio at 7.34, and quarterly Revenue Growth was reported as -33.07%. Gross Profit for LTM2023.Q2 was $23.14 million with a Gross Profit Margin of 41.86%, and the Price/Book multiple is high at 1.7.
Interestingly, as per InvestingPro Tips, Paytm's management has been aggressively buying back shares, a move that often indicates a firm belief in the company's future prospects. On the other hand, the company's revenue growth has been slowing down recently, and the stockholders receive poor returns on book equity.
For more insights like these, consider exploring the InvestingPro product which includes additional tips, with 13 more tips available specifically for Paytm.
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