PAYTM has reported monthly data for March 2022. We summarise the key takeaways here: 1) GMV rose 105% YoY in March 2022, broadly steady vs. January-February 2022. This compares to 123% YoY in Q3FY22. For FY22, GMV grew 110% YoY, to Rs 8,520 bn ($112 bn). 2) Average MTU (implied) growth was steady at 41% YoY in March 2022. For the QE March 2022, average MTU was 70.9 mn (+41% YoY) vs. 64 mn (+37% YoY) in Q3FY22 and 45 mn in FY21.
3) Monthly GMV/average MTU was Rs 12,709 (+45% YoY) vs. Rs 11,894 in January-February 2022 (+45% YoY). For the QE March 2022, monthly GMV/MTU was Rs 12,177 (+45% YoY) vs. Rs 12,950 (+63% YoY) in the last quarter. This compares to Rs 7,451 in FY2021 (+17% YoY).
4) Total devices deployed rose to 2.9mn vs. 2mn in the last quarter. During March 2022, PAYTM added 0.3mn devices. On a trailing 12-month basis, PAYTM has added 2.1mn, implying >260% addition vs. a year ago. 5) Total value of loans disbursed in March 2022 was Rs 14.6 bn compared to Rs 11.7 bn in February 2022 and Rs 9.2 bn in January 2022. For the QE March 2022, loans disbursed were Rs35.5 bn (+415% YoY) vs.22 bn (+364% YoY) in the last quarter. On a full-year basis, value of loans disbursed is Rs 76.2 bn (+441%) for FY22 vs. Rs 14.1 bn in FY21.
6) Total number of loans disbursed in March 2022 was 2.4mn vs. 2.2mn in February 2022 and 1.9mn in January 2022. For QE March 2022, the number was 6.5mn (+374% YoY) vs. 4.4mn (+401% YoY) in the last quarter. On a full-year basis, the number of loans disbursed is 15.2mn (+478% YoY) vs. 2.6mn in FY2021. Average ticket size of loans disbursed rose 10% QoQ to Rs 5,429 vs. Rs 4,939 in the last quarter.
Guidance on Operating Ebitda
The company guided for operating EBITDA break-even in the next six quarters (i.e., by end-September 2023) – it is nearing an end of its current investment phase and expects indirect costs to moderate. We currently project EBITDA break-even in FY25 and will revisit our estimates after Q4FY22 earnings. PAYTM doesn’t expect any impact on its growth trajectory owing to the above.
Valuation
Discounted equity method, probability-weighted 70% base, 25% bear, 5% bull. The RBI has banned new customer onboarding at Paytm Payments Bank and has yet to clarify on potential changes to digital payment charges – we see a slight chance that the latter could move up. We apply adjusted FY26e EV/sales multiples of 5x (base), 4x (bear), and 6.5x (bull) and derive FY25e EV, which we discount to FY23 at a 13.4% WACC. We then add net cash as of March 2024e.
