New Delhi [India], January 10 (ANI): Leading digital payments and financial services company Paytm could surprise with better-than-expected adjusted Ebitda losses in the third quarter (October-December or Q3) of the fiscal, said BofA Securities in its research note.

Analysts at the research firm estimated that Paytm would post 1 per cent quarter-on-quarter (q-o-q) revenue growth versus 14 per cent in July-September 2022. Research firm said this would be on the back of focus on rationalisation where the company is looking to cut back on the unprofitable GMV. Gross merchandise volume (GMV) is the total amount of sales a company makes over a specified period of time, typically measured quarterly or yearly.

BofA Securities added that while this has a negative impact on the revenue growth, from a profitability perspective, it is positive. "Indeed on the back of this, we expect Paytm's adjusted Ebitda (earnings before interest, taxes, depreciation, and amortisation) losses to reduce to Rs 1 billion (from Rs 1.6 bn in the second quarter of the fiscal). This would translate to adjusted Ebitda margin of (-)6 per cent as compared to (-) 9 per cent in July-Sept quarter, bringing Paytm a step closer to profitability.

Paytm to stay aggressive to target new users, new merchants: BofA SecuritiesBofA Securities also expects Paytm's momentum in the lending business as well as its merchant traction to remain strong in Q3. "We don't expect any government reimbursement on UPI in this quarter," it said. Going ahead, despite focus on cost control, BofA sees Paytm to continue to remain aggressive to target new users and new merchants as it looks to fortify its presence in the market. BofA Securities maintains 'neutral' rating on Paytm stock on balanced risk-reward.ICICI Securities sees improvement in adjusted Ebitda of Paytm Q3Analysts at ICICI Securities in January 4, 2023, estimated an 11 per cent quarter-on-quarter operating revenue growth on the back of increasing GMV and lending business along with some increase in commerce and business.

"With management's focus on improving its operating profitability, we expect its direct expenses to decline sequentially and employee expenses (excluding ESOP) to be more or less flat which should improve its adjusted Ebitda (Ebitda before ESOPs)," it added. The research and brokerage firm has given a 'buy' rating to the Paytm stock.

Paytm's strong performance in Dec quarter further strengthens analysts' expectationsPaytm disbursed loans worth Rs 3,665 crore ($443 million) in the given period, growing 330 per cent on-year. The fintech company also added one million payment devices during the quarter and the number of merchants paying subscription for payment devices touched 5.8 million as of December 2022. The company's consumer engagement was at its highest on the Paytm Super App with average monthly transacting users at 85 million for the quarter ended December 2022, up 32 per cent year-on-year.

Paytm also posted consistent growth in total merchant payments volume as the total merchant GMV aggregated to Rs 3.46 lakh crore ($42 billion) for the quarter ended December 2022, marking a year-on-year growth of 38 per cent. (ANI)