Paytm aims to turn operationally profitable by Sep 2023, shares surge
PremiumPaytm raised $2.5 billion in November last year in India's biggest initial public offering
Digital payments firm Paytm said on Wednesday it would be able to breakeven for a key measure of profitability by September next year, boosting its shares, which have struggled so far due to doubts over its business model.
The company's stock, which has lost more than 70% from its IPO price of 2,150 rupees, rose as much as 5.03% to a near three-week high of 639.7 rupees.
"We are encouraged by our business momentum, scale of monetization and operating leverage. We expect this to continue, and I believe we should be operating earnings before interest, taxes, depreciation, and amortization (EBITDA) breakeven in the next six quarters," founder Vijay Shekhar Sharma said.
Backed by China's Ant Group and Japan's SoftBank Group Corp (9984.T), Paytm raised $2.5 billion in November last year in India's biggest initial public offering (IPO), but made a dismal debut on widespread concerns about its high valuation.
Sharma also said his stock grants will only vest when the firm's market capitalisation crosses the IPO level on a sustained basis.
In a letter to shareholders of the company, Sharma said the shares are down significantly compared to the IPO price due to volatile market conditions for high growth stocks globally.
Sharma, in the letter, also said the company was encouraged by the business momentum.
"While we will publish our fiscal 2022 financial results in due course, we are encouraged by our business momentum, scale of monetisation and operating leverage.
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"We expect this to continue, and I believe we should be operating EBITDA breakeven in next 6 quarters (i.e. EBITDA before ESOP cost, and by the quarter ending September 2023), well ahead of estimates by most analysts. Importantly, we are going to achieve this without compromising any of our growth plans," Sharma said.
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