Buy One 97 Communications; target of Rs 1945: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Growth in payments and financial services: One 97 Communications (PAYTM) has seen a 26.1%/27.9% YoY growth in GMV and 52.3%/47.3% YoY growth in financial services revenue in FY26/H1FY27, driven by market share gains and healthy margins.
  • Operating leverage: The company has demonstrated operating leverage, with a 55.9% contribution margin in Q2FY27, driven by payment processing charges and subscription revenue.
  • New revenue segments: PAYTM has opportunities for growth from new segments like MDR revenue and AI services, which lend enough levers for earnings growth.
  • Diversified presence: The company has a diverse presence across the payment ecosystem, including postpaid, wallet, international, and consumer payments.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for:

  • Sustained growth in GMV and financial services revenue
  • Improving operating leverage and contribution margins
  • Successful monetization of new revenue segments like MDR and AI services
  • Continued market share gains in the payment ecosystem
  • Effective management of regulatory challenges and risks