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Synopsis: Paytm achieved a major financial milestone by reporting its first net profit in Q2 FY25. The profit of Rs 928.3 crore was largely driven by a strategic sale to Zomato, which resulted in an exceptional gain. The company also improved its core operations, especially in financial services, reflecting growth in loan distribution. Positive regulatory updates and strengthened cash reserves signal further growth prospects. Despite a recent decline, Paytm’s stock has shown a significant upward trend over the last six months, highlighting market optimism.
Introduction Paytm, a leading fintech company under One 97 Communications Ltd, reported its first-ever net profit in Q2 FY25 since going public. The company posted a net profit of Rs 928.3 crore, marking a major financial turnaround.
Revenue Overview
Sequential Growth: Revenue from operations rose by 10.5% to Rs 1,659.5 crore compared to the previous quarter.
Year-on-Year Decline: Despite the sequential growth, revenue declined by 34.1% year-on-year.
Profit Drivers
Strategic Sale: Paytm’s profit was primarily driven by the sale of its ticketing business to Zomato for Rs 2,014 crore, resulting in an exceptional gain of Rs 1,345 crore.
Reduction in Core Loss: Excluding the one-time gain, Paytm's net loss reduced to Rs 406.5 crore, showing an improvement from Rs 838.6 crore in the previous quarter.
Growth in Financial Services
Strong Loan Growth: Financial services revenue, mainly from loan distribution, surged by 34% sequentially. This growth was attributed to higher merchant loan collections and improved asset quality.
Cash Reserves: The sale helped boost Paytm’s cash reserves to Rs 10,000 crore, enhancing its financial strength for future investments.
Regulatory Updates
Investment Approval: The Ministry of Finance approved downstream investment into Paytm Payments Services Ltd (PPSL). PPSL has since resubmitted its payment aggregator application to the RBI and continues to serve its existing online merchants.
Stock Performance
Positive Market Reaction: Despite a recent dip, Paytm's stock has surged 84% in the last six months, indicating investor confidence in the company’s strategic direction.
Disclaimer The details provided are based on Paytm’s Q2 FY25 financial performance and recent updates. Financial conditions may vary, and readers are encouraged to conduct further research before making investment decisions.
