Shares of India’s leading digital ecosystem for consumers as well as merchants slumped nearly 7.7 percent on BSE to Rs. 669.65 on Tuesday, despite reporting decent Q2 FY25 financial results with a net profit of Rs. 930 crores, due to one-time exceptional gains.
With a market cap of Rs. 44,412 crores, at 02:00 p.m., the shares of One 97 Communications Limited were trading in the red at Rs. 698, down by nearly 3.8 percent, compared to its previous closing price of Rs. 725.85.
What’s the news:
The fluctuations in the share prices were also observed after One 97 Communications Limited announced the financial results for Q2 FY25, through the latest filings with the stock exchanges during the trading session of Tuesday.
For Q2 FY25, the company reported consolidated revenue from operations of Rs. 1,660 crores, reflecting an increase of around 11 percent QoQ from Rs. 1,502 crores in Q1 FY25, while a decline of about 34 percent YoY from Rs. 2,519 crores in Q2 FY24.
This 11 percent QoQ revenue growth was primarily driven by a 5 percent QoQ rise in gross merchandise value (GMV), improved realizations from devices, and a 34 percent QoQ increase in revenue from financial services.
The company’s PAT for Q2 FY25 grew to Rs. 930 crores, representing a significant recovery from a loss of Rs. 840 crores in Q1 FY25 and a year-on-year improvement from a loss of Rs. 292 crores in Q2 FY24.
The profit after tax (PAT) stood at Rs. 930 crores in Q2 FY25, including an exceptional gain of Rs. 1,345 crores, as a result of the sale of the entertainment ticketing business to Zomato.
With the growth in revenue, an improvement in contribution margin, and a reduction in indirect costs, EBITDA improved by Rs. 388 crores quarter-on-quarter, standing at a negative Rs. 404 crores in Q2 FY25, compared to a negative Rs. 792 crores in Q1 FY25. The company maintains a cash balance of Rs. 9,999 crores.
With increased confidence in Paytm’s merchant loan distribution business, which involves both distribution and collection, the company has begun collaborating with select lenders by providing the Default Loss Guarantee (DLG) for specific portfolios. This strategy aims to expand the merchant base and enhance financial services distribution revenue in the long term.
Business Highlights:
Payment services revenue for Q2 FY25 reached Rs. 981 crores, marking a growth of 9 percent QoQ. The net payment margin improved to Rs. 465 crores, reflecting a 21 percent QoQ rise, primarily driven by improvement in payment processing margins, better device realization and growth in GMV.
As of September 2024, the merchant subscriber base for devices grew to 1.12 crores, an increase of 3 lakh compared to the previous quarter.
Additionally, the company’s financial services revenue climbed to Rs. 376 crores, a 34 percent QoQ increase, on account of higher collection bonuses in merchant loans resulting from improved asset quality trends and a larger share of merchant loans.
The contribution margin, excluding UPI incentives, rose to 54 percent, despite including DLG costs in this quarter. This improvement is due to increased payment processing margins and growth in high-margin financial services revenue. The company anticipates that these positive contribution margin trends will persist.
Indirect costs decreased by 17 percent QoQ, totalling Rs. 1,080 crores, driven by a reduction in employee expenses (down 13 percent QoQ), lower marketing costs, and the absence of certain one-time expenses incurred in Q1 FY25.
Stock Performance:
The stock has delivered negative returns of nearly 24.4 percent in one year, but around 84.6 percent of positive returns in the last six months. So far in 2024, the shares of One 97 Communications have given positive returns of about 8 percent.
About the company:
Incorporated in 2000, One 97 Communications (Paytm) Limited is one of India’s leading payment solutions providers in India with a digital ecosystem offering consumers and merchants a wide range of services including comprehensive payment solutions, payment facilitator services, facilitation of consumer and merchant lending, wealth management, insurance broking services, and more.
Written by Shivani Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
.
