Set for IPO, Paytm cuts down on losses, diversifies

Surabhi Mumbai | Updated on May 31, 2021

Fintech firm also improves revenue from operations

Fintech major Paytm, which is getting ready for listing, has been cutting down on its losses and has also been diversifying into businesses other than payments.

One97 Communications Ltd, which is the parent company of Paytm, posted a net loss of ₹2,833.18 crore in the year ended March 31, 2020, according to data from Tofler.

This was an improvement from the net loss of ₹3,959.64 crore in 2018-19, it revealed.

However, the losses had widened compared to 2018-19, when it had registered a net loss of ₹1,490.47 crore.

Also read: Paytm eyes $3-billion IPO

Revenue from operations and net worth had touched an all time high in 2019-20.

Its revenue from operations also improved marginally to ₹3,115 crore in 2019-20 from ₹3,049.87 crore in the previous fiscal. Its net worth had increased by 39.35 per cent to ₹8,411 crore as on March 31, 2020. The board of One97 Communications in its meeting on May 28 had approved the IPO.

$3-billion fundraising plan

The company is hoping to file its draft red herring prospectus (DRHP) by July and launch its IPO in November or December this year to raise $3 billion. According to sources, Paytm could raise $1.5 billion through the primary sale route ahead of the IPO.

Significantly, existing shareholders including Japanese conglomerate SoftBank, Elevation Capital and Ant Financial are also likely to dilute their shareholding as part of the IPO. SoftBank is looking to sell shares of as much as $1.5 billion in the IPO. Paytm did not comment on an email query sent by BusinessLine.

With the IPO plan in process, it is likely that Paytm's financial position may have improved further but whether it has managed to break even is still to be seen. “Paytm has come a long way from a simple digital wallet business to an integrated payments ecosystem...With increased financial discipline (rare in the hyper competitive payments space), Paytm is on track to break even in 12 to 18 months,” said a recent report by Bernstein.

Valuation improves

Vijay Shekhar Sharma, who is the founder and CEO of Paytm, had earlier indicated that the company would look at a possible listing after cutting down on losses. Its valuation is also understood to have increased from around $16 billion to about $20 billion.

Its subsidiaries include One97 Communications India Pvt Ltd, Paytm Entertainment, Paytm Money, Paytm Financial Services, Paytm Insurance, Mobiquest Mobile Technology and Nearbuy India Private Ltd apart from other ventures such as Paytm Payments Bank and Paytm Life Insurance.

Payments, banking and insurance clearly seem to be the focus areas for the company at present.

The report by Bernstein noted that Paytm has about a 35 crore installed base, about 5 crore active user base and over 2 million merchant base.

“Paytm has realigned strategy to focus on merchant payments (on wallet and UPI) and is building a comprehensive merchant payment solution for both offline and online merchants,” it said.

In terms of UPI market share, Paytm Payments Bank app is the third most used after PhonePe and GooglePe.

Paytm Payments Bank, which has about 6.4 crore bank accounts, has tied up with Suryoday SFB to offer fixed deposits. It also made a net profit of ₹29.8 crore in 2019-20.

Published on May 31, 2021

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