Following a tumultuous introduction to the company behind India’s largest initial public offering, Paytm’s top executives spent 90 minutes on a call with investors and analysts on Saturday raising questions about splitting and monetizing its business model.
It remains to be seen when the markets reopen whether the authorities have done enough to allay doubts about revenue flows and profit opportunities. One97 Communications, a digital payments company, closed 17 per cent last week above its offer price of Rs 2,150 ($ 28.68) after falling to Rs 1,271 at one point.
Over the weekend, One97 reported losses of up to 4.74 billion rupees in the July-September quarter from a year earlier amid rising costs. With the growth of finance, commerce and cloud services, revenue has grown by more than 60 per cent over the same period.
“Strong momentum in revenue growth will continue,” Chief Financial Officer Madhur Deora said in a statement. The contribution margins increased “consistently with clear trends towards year-on-year improvements,” he said at the presentation, which was later filed on the stock exchanges.
CEO Vijay Sehgar Sharma highlighted the company’s progress in key areas of lending – a key and fastest growing market in India with a credit crunch, digital finteks like Paytm serve millions of consumers and merchants.
“We are fully committed to being upside down, implementing and delivering the best results quarterly, year after year,” Sharma said in his opening remarks.
Kranthi Pathini, WealthMills Securities Pvt. Stock strategist with. Ltd said Paytm’s numbers did not immediately appear encouraging.
“It is under development, so the costs will be high, but it should draw a line as to how much money they can burn,” Pathini said. “It’s important to build integration between a big brand and their businesses. It’s important to make sure it starts to show productivity in the revenue that goes forward.
Paytm raised $ 2.5 billion in its IPO, but debuted in the late 1990s as one of the worst opening scenes since the dot-com bubble era by a major technology company.
Sharma founded One97 two decades ago and began offering digital payments in 2014. It has grown Masayoshi Son’s Softbank Group Corp, Warren Buffett’s Berkshire Hathaway and Jack Maw’s Ant Group into the nation’s most recognized payments brand.
Paytm has more than 335 million users who use its site to make payments and transfer money. However, Fintech companies have been struggling to make digital transactions in India’s wide range of e – tariffs, especially in the consumer market, including Paytm’s rivals Alphabet Inc’s Google Pay, Amazon.com Inc’s Amazon Pay and Walmart Inc’s PhonePe.
“India has a huge opportunity to borrow and the size increase from where we are today would be huge,” said Bhavesh Gupta, head of the company’s credit division, in a call on Saturday. “Paytm exists in both consumer credit and business credit. We have a bilateral opportunity.”
Paytm, its financial services division, saw higher revenue and profit after volume growth, its trading business, which includes stock trading, airline and movie tickets, has rebounded, and the increase in cloud services has boosted advertising revenue.
“Lending and advertising in particular contribute significantly to higher profits,” Sharma acknowledged the competition in those businesses.
Anand Tama, research head for MK Global Financial Services Banks and Financial Institutions, said the company’s path to profitability could be through lending, accelerating trading and cloud services and reducing marketing costs. The expected moderation in the high-margin wallet business will lead to sustained pressure on revenue growth, especially in the payments business, he said.
(Except for the title, this story was not edited by NDTV staff and published from a syndicate feed.)