In its Q4FY25 end result note on paytm (One97 Communications Ltd.), YES Securities has maintained an add score and raised the stock's target fee to Rs 975 from Rs 915, citing improvements in contribution margin, operating performance, and lending momentum.
The brokerage stated meaningful sequential gains throughout key monetary and working metrics, while regulatory incentives like UPI subsidies moderated year-on-year.
Revenue grew 4.6% region-on-area to Rs 1,911 crore, with price offerings sales up 4.3% QoQ and monetary offerings revenue up 8.6% QoQ, in line with the report. No matter a sharp drop in UPI incentives (from Rs 288 crore in Q4FY24 to Rs 70 crore in Q4FY25), contribution profit rose 11.8% QoQ to Rs 1,072 crore, resulting in a contribution margin of 56.1%, up through 363 basis factors.
"The upward thrust in contribution margin became driven via development in net charge margin and value optimization, specifically in processing expenses," the analysts stated.
The file highlighted that price processing prices declined 8.8% QoQ, taking advantage of favorable blend, seasonality, and partner charge adjustments. These efficiencies, combined with stable worker and platform costs, led to EBITDA before ESOP turning wonderful at eighty-one crore, in comparison to a loss of Rs 40 crore within the preceding sector. EBITDA margin progressed with the aid of 642 bps sequentially, accomplishing 4.2%.
Sure Securities additionally noted that advertising, worker advantages, and software prices were largely flat or lower, indicating tight value control.
In lending, merchant loan disbursals grew 12.6% QoQ to Rs 4,320 crore, with 50-60% of disbursements now underneath the Default Loss Guarantee (DLG) model. The report observed that nearly half of the service provider loans had been repeat transactions, suggesting strengthening borrower behavior and product adoption.
"The DLG version is gaining momentum with creditors, and the better-margin lending mix is assisting revenue stability," the document noted.
The service provider's subscription base rose 6% QoQ to 12.4 million at the same time as the corporation persisted to expand its tool-led monetization footprint throughout offline touchpoints.
Sure, Securities reaffirmed Paytm's medium-term steering of 30-35% revenue boom and 15-20% EBITDA margin, declaring that future margin enlargement is possible as ESOP-related costs taper and monetization improves.
The brokerage similarly stated that ongoing discussions around MDR on UPI for huge merchants ought to bring about a 5-8 foundation factor upside in net margin if carried out.
"We hold add score on paytm with a revised target fee of Rs 975, valuing it at 5.4x FY27 price-to-income," the record concluded.
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