YES Securities raises Paytm target to Rs 975 on profitability turnaround and surge in merchant lending
In its Q4FY25 result note on Paytm (One97 Communications Ltd.), YES Securities has maintained an ADD rating and raised the stock's target price to Rs 975 from Rs 915, citing improvements in contribution margin, operating efficiency, and lending momentum. The brokerage noted meaningful sequential gains across key financial and operating metrics, even as regulatory incentives like UPI subsidies moderated year-on-year.Revenue grew 4.6% quarter-on-quarter to Rs 1,911 crore, with payment services revenue up 4.3% QoQ and financial services revenue up 8.6% QoQ, according to the report. Despite a sharp drop in UPI incentives (from Rs 288 crore in Q4FY24 to Rs 70 crore in Q4FY25), contribution profit rose 11.8% QoQ to Rs 1,072 crore, resulting in a contribution margin of 56.1%, up by 363 basis points.advertisement'The rise in contribution margin was driven by improvement in net payment margin and cost optimisation, especially in processing charges,' the analysts stated.
The report highlighted that payment processing charges declined 8.8% QoQ, benefiting from favourable mix, seasonality, and partner rate adjustments. These efficiencies, combined with stable employee and platform costs, led to EBITDA before ESOP turning positive at 81 crore, compared to a loss of Rs 40 crore in the previous quarter. EBITDA margin improved by 642 bps sequentially, reaching 4.2%.YES Securities also noted that marketing, employee benefits, and software costs were largely flat or lower, indicating tight cost control.In lending, merchant loan disbursals grew 12.6% QoQ to Rs 4,320 crore, with 50–60% of disbursements now under the Default Loss Guarantee (DLG) model. The report observed that nearly half of the merchant loans were repeat transactions, suggesting strengthening borrower behaviour and product adoption.advertisement'The DLG model is gaining momentum with lenders, and the higher-margin lending mix is helping revenue stability,' the report noted.The merchant subscription base rose 6% QoQ to 12.4 million, while the company continued to expand its device-led monetisation footprint across offline touchpoints.YES Securities reaffirmed Paytm's medium-term guidance of 30–35% revenue growth and 15–20% EBITDA margin, stating that future margin expansion is likely as ESOP-related expenses taper and monetisation improves.The brokerage further noted that ongoing discussions around MDR on UPI for large merchants could result in 5–8 basis points upside in net margin if implemented.'We maintain ADD rating on Paytm with a revised target price of Rs 975, valuing it at 5.4x FY27 Price-to-Sales,' the report concluded.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
16 minutes ago
- Time of India
Techie tries to buy a Gurgaon flat but finds even his Rs 1.2 lakh in-hand salary with no responsibilities not good enough
In today's India, earning Rs 20 lakh per annum is often seen as the benchmark of financial comfort. But a recent viral post on X has struck a chord with thousands, exposing the grim reality of urban homeownership , even for high earners. Shared by a user named Akhilesh, the post details how a friend living in Gurgaon , despite a hefty Rs 20 LPA CTC and frugal lifestyle, still finds himself priced out of the real estate market. In the tweet, Akhilesh writes about his friend's predicament: no car, no children, modest lifestyle, yet every real estate project he visits starts at a steep Rs 2.5 crore. 'If he buys this, he has to live paycheck to paycheck. No buffer. No vacations. No emergencies,' the tweet reads. Despite being in the top 5% of Indian earners, the post suggests, owning a decent home in a metro city remains out of reach, highlighting a growing mismatch between income and urban housing prices. — akhileshutup (@akhileshutup) Netizens react The post quickly caught fire online, igniting a flurry of responses that reflect the simmering frustration among India's salaried middle class. One user echoed the sentiment, writing, 'It's wild how even a high salary feels inadequate in certain cities. Many people are in the same boat, juggling expenses while trying to save. It makes you question what success means nowadays.' Another pointed out the long-term burden of luxury add-ons like 'infinity pools, zen gardens, biometric lifts', which not only inflate the purchase cost but also hike up monthly maintenance charges in the future. The discussion also took a broader economic turn, with one user arguing, 'He earns more than 95% of Indians. That means 7 crore people earn more than him, and a significant portion live in metro cities like Delhi. That's lakhs of families competing for premium housing. Demand is simply outpacing supply.' While some suggested that renting is a smarter option in the current climate, others questioned the societal obsession with homeownership. One user summed it up: 'Rent pe raho. Don't buy a home right now. Save up. Invest. You buy a home when you can afford it, not according to your whims and fancies."
NDTV
18 minutes ago
- NDTV
Vijay Mallya On Kingfisher Airlines Downfall: "I Went to Shri Pranab Mukherjee"
Fugitive businessman Vijay Mallya, facing fraud and money laundering allegations, has revealed new details about Kingfisher Airlines' downfall. He said he approached then Finance Minister Pranab Mukherjee with a plan to downsize the airline to save it. According to Mr Mallya, his request was met with opposition. In a conversation with YouTuber Raj Shamani, Mr Mallya revisited the collapse of Kingfisher Airlines, attributing much of the airline's troubles to the 2008 global financial crisis. He said that Kingfisher Airlines operated smoothly until 2008, but the situation changed drastically with the onset of the global financial crisis. The economic downturn had a significant impact on India, affecting nearly every sector of the economy, he said. 'The money stopped. It got dry. The value of the Indian rupee also took a hit,' Mr Mallya said. Kingfisher Airlines was launched in 2005, and it earned praise for its premium service. However, financial difficulties escalated as the global economy faltered. Mr Mallya said that recognising the worsening economic climate, he reached out to Pranab Mukherjee to seek permission to shrink Kingfisher's operations. 'I went to Shri Pranab said I have a problem. Kingfisher Airlines needs to downsize, cut the number of aircraft, and lay off employees, as I can't afford to operate under these depressed economic circumstances,' Mr Mallya said. Mr Mallya claims his appeal was rejected. 'I was told not to downsize. You continue, banks will support you. That is how it all started.' Mr Mallya added that despite these assurances, Kingfisher Airlines was ultimately compelled to halt all flights amid mounting financial troubles. During the podcast, the liquor baron also addressed allegations around his financial dealings, claiming he made four settlement offers to banks that were rejected despite his clear intent to repay. He criticised the lack of transparency from banks, stating he never received a formal statement of account despite 15 reminders, and that the total debt of Rs 14,131.6 crore was only revealed through a finance minister's statement in Parliament. Citing a Debt Recovery Tribunal certificate, Mr Mallya disputed media reports of Rs 9,000 crore debt, insisting the documented figure is Rs 6,203 crore. He also questioned being labelled a 'chor' despite having repaid more than what was owed and said he is prepared to stand trial — not for wrongdoing, but for alleged bad intentions.
Business Standard
27 minutes ago
- Business Standard
RIR Power Electronics surges after expanding SiC diodes production capacity
RIR Power Electronics jumped 4.49% to Rs 2859.85 after the company announced successful production expansion and shipment of 1200V SiC diodes from Taiwan. The company stated that the expansion of production was made possible through a strategic collaboration with a contract fab at Pro Asia Semiconductor Corporation (PASC), Taiwan and by leveraging technology IP that RIR Power had acquired from Sicamore Semi, USA. The product portfolio includes 1200V Schottky Barrier Diodes (SBDs) ranging from 2 amps to 60 amps, addressing the most common ratings used across multiple applications and markets globally. The company further said that it has already secured purchase orders for the said diodes from Richardson Electronics (USA) and Ankit Plastics (India), both key suppliers to the commercial, industrial and defence sectors. Besides being able to serve existing domestic Indian and the USA customers, shipping from Taiwan would provide RIR Power Electronics improved access to strategic high-growth markets for SiC devices in the South East Asian region. Dr. Harshad Mehta, chairman & director, RIR Power Electronics, said: This achievement marks a significant leap for RIRs power electronics manufacturing capabilities and helps to expedite the ramp up and shipment of SiC devices on 6-Inch wafers from RIRs proposed Odisha Fab. By successfully scaling up world-class SiC technology, RIR Power is positioned to serve global high-growth markets including automotive, industrial, renewable energy, and defence, while strengthening the domestic semiconductor ecosystem. RIR Power Electronics is a global pioneer in high-power semiconductor solutions. Its product portfolio comprises of high-performance semiconductor devices, assemblies, and energy management systems. The company's consolidated net profit declined 12.59% to Rs 2.43 crore despite a 22.67% increase in net sales to Rs 26.46 crore in Q4 FY25 as compared with Q4 FY24.
