One97 Communications (Paytm) recorded revenue of ₹1,830 crore in Q3FY25, reflecting a 10% increase quarter-on-quarter. This growth was primarily fueled by a steady rise in Payments GMV, which saw a 13% increase quarter-on-quarter, as well as a stronger performance in financial services driven by higher take-rates in merchant loan disbursals, which increased by 16% quarter-on-quarter.
The improved take-rate in financial services, which saw a 188 bps sequential increase, can be attributed to several factors, including the shift of 80% of merchant loan disbursals (worth ₹3,100 crore) to FLDG, a higher mix of merchant loans, and collection efficiencies leading to higher incentives on these loans. On the other hand, Personal Loans experienced a 12% dip quarter-on-quarter, while merchant loans saw a 16% increase driven by pent-up demand.
Marketing services revenue declined by 12% sequentially, though this was flat excluding the Events Ticketing business. With front-ended DLG costs now included under other direct expenses, the company reported a 130bps sequential decrease in contribution margin. However, strict control over indirect expenses helped the company achieve an Adj. EBITDA loss of ₹40.5 crore, marking an improvement of ₹150 crore quarter-on-quarter.
Looking ahead, it is expected that the impact of DLG costs will normalize, with the contribution margin reverting back towards 55% (excluding UPI incentives). The company is anticipated to report PAT profitability in the next quarter, thanks to UPI incentives amounting to ₹350 crore.
The target price for Paytm is set at ₹1,250, with the current market price standing at ₹853.20. The outlook remains positive for the company, with expectations of further growth and profitability in the coming quarters.
