The shares of One 97 Communications Ltd, also known as Paytm, saw a rise of over 7% in Monday’s trading on the BSE, with each share being worth ₹563, following the company’s announcement of its first-ever quarterly operating profit since going public and a reduction in losses during Q3 of the current fiscal year.
Paytm e-payment app reported a decrease in net loss for the quarter ending December, from ₹779 crores the previous year to ₹392 crores. At the same time, the company saw a 42% increase in revenue from operations, reaching ₹2,062 crores.
The company reported that its growth was due to an increase in revenue from merchant subscriptions, growth in loan distribution, and growth in commerce business. The comparison of year-over-year growth was affected by the timing of the festive season and the fact that incentives from UPI were recorded in Q3 FY 2022 for three quarters, but none were recorded in the current quarter.
The CEO of the company, Vijay Shekhar Sharma, expressed his delight in a statement that the company had reached the milestone of earning EBITDA before ESOP costs in the quarter ending December 2022, which is three quarters ahead of their initial projections. He also stated that with a focus on growth and strict monitoring of operational risks and compliance, he was confident that the company would soon reach its next goal of becoming a cash flow-generating company.
Additionally, the company reported that the number of loans increased by 137% from the same quarter the previous year to 10.5 million. As of December 2022, 8.1 million borrowers have taken a loan through Paytm’s platform, with an additional 1.4 million new borrowers added during the quarter. The Average Monthly Transacting Users (MTU) also showed growth, reaching 85 million for the quarter, a 32% year-over-year increase driven by customer acquisition.
Ravi Singh, Vice-President and Head of Research at Share India, commented that the Paytm stock price rebounded due to improved earnings in the third quarter. However, he stated that the company’s fundamentals remain weak and will require multiple quarters of improved performance to regain investors’ confidence. He also added that the outlook is not positive and the stock price may fall to the range of ₹520 – 500 in the near future.
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