Global market conditions affected the IPO: Paytm founder

Vijay Shekhar Sharma, co-founder of the holding company One97 Communications Ltd, said negative macro trends affected the company’s Initial Public Offering (IPO) even as the stock fell further on Wednesday.

In one of his first public appearances since the company’s disastrous market debut in November last year, Sharma, speaking with Sequoia Capital’s Managing Director Rajan Anandan, at IAMAI’s India Digital Summit 2022, said the One97 The world markets were terrified. Through various factors affected the performance of its inclusion.

“Globally, we probably entered a time when quantitative easing, free money and a lot of other factors took a little bit out of the market,” he said. Prices for companies in South America have fallen by more than 70%. This is not entirely the reason. This is a total cause.”

Sharma said the business is progressing well, driven by payments revenue. “Paytm’s success will depend on what we do with monetization led by financial services,” he said. “Payment is a revenue item that is growing exponentially. This quarter, we’re talking about $100 million in revenue from payments which is a great return.”

He claimed that Paytm was seeing higher revenue at lower costs. “People underestimate the compounding influence of the customer base on this platform,” he said. “We’ve had far less than any year ever… Our work has never been better.”

One 97 shares closed at Rs 1,081.45 on the Bahrain Bourse on Wednesday, down 3.41% from the previous close. Paytm’s market capitalization has fallen to $9.49 billion, as of Wednesday, from its peak private market valuation of $16 billion.

On Monday, brokerage Macquarie lowered Paytm’s parent price target to 900 rupees from 1,200 rupees. This was 58% lower compared to the issue price of Rs 2,150.

Macquarie said Paytm’s payments business accounts for 70% of total gross revenue, so any regulations that set fees for digital payments could affect the company.

Sharma said the contribution margin for payments remained in the double digits for Paytm. He said that quarterly revenue from payments was $140 million if the merchant services it provides are included, and its revenue is expected to grow 50% to 60% year over year.

“Credit is the most liquid financial service,” Sharma said.

He said Paytm, after only three years in the business, is now processing more loans than Bajaj Finance has been around for 30 to 32 years. “As for our fiduciary business, we should compare ourselves to only one man, Bajaj (Finance),” he said. “(Paytm) should be viewed in terms of the volume we offer in terms of total loans, loan value and loan quality.”

The problem in our country was with the companies that give loans – banks and non-bank financial companies. The wrong metric he pursues is the size of the loan. The best metric they should seek is the quality of the loans.

Earlier this week, Paytm said loans disbursed through its platform jumped five times year-on-year to 4.4 million loans during the December quarter, as part of its public disclosure with Indian exchanges.

According to the company, the value of loans granted through its platform during the December quarter was Rs 2,180 crore, an increase of 365 percent year-on-year. The average loan size offered by Paytm is currently around Rs 5,000.

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Andrew Naughtie

News reporter and author at @websalespromo