Turning tide: Fintech firm Paytm's Ebitda likely to break even this quarter

Brokerages expect improved contribution of financial services into revenue pie

One97 Communications, the company that operates Paytm, is expected to achieve breakeven at an Ebitda (earnings before interest, taxes, depreciation, and ammortisation) level before ESOP (Employee Stock Ownership Plan) expenses in the current or fourth quarter of the financial year 2024-25 (Q4FY25), according to two brokerage estimates.  

It is expected to achieve breakeven at net profit level in Q4FY26, brokerage firm Mirae Asset Capital Markets said in a note.

  The company’s stock traded just 0.03 per cent higher to Rs 982.3 on the BSE on Friday.  

The breakeven would come on the back of an improved contribution of financial services to the revenue pie. 

 

In Q2FY25, the Noida-based company posted a consolidated profit of Rs 928.3 crore on the back of the sale of its movie ticketing and events business to Zomato.  

“Despite facing recent regulatory restrictions that caused a decline in its monthly transactions (71 million in Q2FY25 versus 100 million in Q3FY24), Paytm’s merchant base has remained stable at 42 million due to strategic measures to retain existing merchants on its platform,” Mirae Asset Capital Markets said in the note.  

Paytm posted a wider consolidated loss of Rs 549.6 crore in Q4FY24, compared to Rs 168.4 crore in Q4FY23. This had come after the Reserve Bank of India (RBI) took action on the firm’s associate entity Paytm Payments Bank.  

In the quarters succeeding the RBI’s action, the company paused its payments and financial services such as wallets and buy now, pay later (BNPL) loans.  

However, the gross merchandise value (GMV) at the company is expected to improve on the condition of the revival of such products in the future, Mirae Asset Capital Markets added.  

“We estimate 10 per cent quarter-on-quarter (Q-o-Q) growth in GMV in Q3FY25 to Rs 4.9 trillion. Revenue from operations is projected to increase 8 per cent Q-o-Q to Rs 1,800 crore, while contribution profit is estimated to rise 14 per cent Q-o-Q to Rs 1,012 crore (Rs 10.12 billion) in Q3FY25,” said Motilal Oswal Financial Services in a research note.  

For the company, revenue from operations declined 34.1 per cent from Rs 2,518.6 crore in Q2FY24 to Rs 1,659.5 crore in Q2FY25. Sequentially, though, revenue grew 10.5 per cent from Rs 1,501.6 crore in Q1FY25. 

At present, the company has a base of 42 million registered merchants including 11.2 million payment devices deployed among these merchants. The number of merchants has largely remained unchanged after the RBI action, Mirae Asset Capital Markets noted.  

After the banking regulator’s crackdown on its payments bank in January last year, the company lost its market share to India’s real-time payments service Unified Payments Interface (UPI) from 12.79 per cent in January 2024 to 6.91 per cent in November 2024, according to data from the National Payments Corporation of India (NPCI).  

In September last year, the company’s founder and chief executive officer (CEO) Vijay Shekhar Sharma said the firm may focus on its core business of payments and cross-sell of financial services as it works to achieve ‘profitability soon’. 

 

In 2024, the company sold its movie and ticketing business to Zomato for Rs 2,048 crore and divested its stake in Japanese fintech PayPay at a value of Rs 2,000 crore ($250 million). 

 

Turning Tide

  *  Breakeven at net profit level expected in Q4FY26

  *  Its merchant base remains stable at 42 mn despite regulatory action, say brokerages 

  *  11.2 mn payment devices are deployed among these merchants

  *  Paytm posted a consolidated profit of Rs 928.3 cr in Q2FY25 

  *  It was on the back of sale of its movie ticketing biz to Zomato