Neutral One 97 Communications; target of Rs 1850: Motilal Oswal

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Paytm's revenue growth is steady, with a 28% YoY increase, driven by growth in payments and financial services, with a focus on high-quality merchants and threshold-based pricing.
  • The company's net payment margin has improved, with an 8% YoY increase, amid contained growth in payments processing charges, and a potential 2.5bp rise in overall PPM due to the proposed MDR on select UPI transactions.
  • Paytm's contribution margin has expanded to 55.9%, driven by healthy revenue growth and controlled expenses, with a focus on improving operating leverage through AI-led efficiency gains.
  • The company's EBITDA margin has expanded to 10.2%, reflecting better profitability, with a potential upside of INR7-8b in FY28 from UPI MDR.

Thesis Validation Checklist

  • Watch for steady revenue growth, driven by payments and financial services, with a focus on high-quality merchants.
  • Monitor the improvement in net payment margin, driven by contained growth in payments processing charges and the proposed MDR on select UPI transactions.
  • Track the expansion of contribution margin, driven by healthy revenue growth and controlled expenses, with a focus on improving operating leverage.
  • Monitor the growth of EBITDA margin, reflecting better profitability, with a potential upside from UPI MDR.