Paytm Shares Surge Nearly 7% Post Q4 FY25 Results: Analyst Insights

Paytm Shares Surge Nearly 7% Post Q4 FY25 Results: Analyst Insights

May 7, 2025 — Shares of One97 Communications Ltd., the parent company of fintech platform Paytm, witnessed a significant uptick of nearly 7% in early trading on Wednesday, following the release of its Q4 FY25 financial results. The company's narrowed losses and positive EBITDA have garnered attention from investors and analysts alike.

Financial Highlights: Q4 FY25

• Net Loss: ₹540 crore, a marginal improvement from ₹550 crore in Q4 FY24.

• Exceptional Items: ₹522 crore, primarily due to accelerated ESOP expenses of ₹492 crore and other impairments of ₹30 crore.

• Adjusted Net Loss: ₹18 crore, excluding exceptional items.

• Revenue from Operations: ₹1,912 crore, down 16% YoY from ₹2,267 crore.

• EBITDA (before ESOP expenses): ₹81 crore, marking a positive shift and an improvement of ₹121 crore QoQ.(The Economic Times, mint, Business News Today, The Economic Times)

The company's revenue decline is attributed to a reduction in payment processing fees. However, increased revenues from financial services distribution and a ₹70 crore UPI incentive for FY25 provided some offset. (mint)

Market Reaction

Following the earnings announcement, Paytm's stock opened at ₹860 on the BSE, reflecting a 5.5% increase. The positive market response underscores investor confidence in the company's trajectory towards profitability. (The Economic Times)

Analyst Perspectives

UBS: Maintains a 'Neutral' rating with a 12-month price target of ₹1,000. The firm notes that disciplined cost management led to an EBITDA beat, though PAT was impacted by one-time ESOP expenses. (Business Today)

Emkay Global: Assigns a 'Buy' rating with a target price of ₹1,050, citing business consolidation and cost optimization as key factors in reducing overall losses. (Business Today)

JM Financial: Reiterates a 'Buy' rating with a March 2026 target of ₹1,070, highlighting potential upside risks and favorable valuations. (Business Today)

Motilal Oswal: Maintains a 'Neutral' stance with a target price of ₹870, acknowledging the company's recovery in business metrics and steady GMV growth. (Business News Today)

Operational Metrics and Future Outlook

• Merchant Base: Expanded to 44 million, with 7 lakh devices added in Q4.

• Merchant Loans: Grew 13% QoQ, contributing to a 9% sequential increase in financial services revenue.

• Contribution Profit: ₹1,071 crore, up 12% QoQ, with a stable contribution margin of 56%.

• Cash Balance: ₹12,809 crore, providing a solid liquidity position.(Business Today, The Economic Times, Business Today)

Paytm anticipates that policy clarity around merchant discount rates on UPI transactions could offer additional monetization opportunities. The company is also exploring international expansion to drive long-term growth. (The Economic Times)

Paytm's Q4 FY25 results indicate a positive shift towards profitability, with narrowed losses and a return to positive EBITDA. While revenue challenges persist, the company's strategic focus on financial services and cost optimization has been well-received by the market. Analyst opinions remain mixed, but the overall sentiment leans towards cautious optimism as Paytm continues its growth trajectory.