Paytm will be operationally profitable by next Sept: Vijay Shekhar Sharma
Premium- Sharma’s comments on the company’s path to profitability and the business growth numbers notified by the company lifted Paytm’s stock to over 3% on the BSE
Vijay Shekhar Sharma, the founder and chief executive officer of Paytm’s parent One97 Communications Ltd, on Wednesday, said that the company expects to achieve operational profitability in the next six quarters.
“We are encouraged by our business momentum, the scale of monetization and operating leverage. We expect this to continue, and I believe we should be operating EBITDA (earnings before interest, tax, depreciation and amortization) breakeven in the next six quarters (that is EBITDA before ESOP cost and by the quarter ending September 2023), well ahead of estimates by most analysts," Sharma said in a letter addressed to shareholders.
The letter was notified to the stock exchanges along with Paytm’s quarterly update on operating performance.
Sharma’s comments on the company’s path to profitability and the business growth numbers notified by the company lifted Paytm’s stock to over 3% on the BSE.
At 11:20 am, Paytm was trading at ₹628.70 a piece on the BSE, up 3.23% from its previous close of ₹609.05.
Sharma’s comments come at a time when shares of Paytm have fallen over 70% since it got listed on the bourses in November last year at an initial public offer (IPO) price of ₹2,150 apiece.
Public shareholders have raised concerns over the company’s path to profitability, as it has not reported a net profit to date. Moreover, many global and domestic investment advisors have advised against buying the company’s shares and have slashed their target prices on the stock.
For instance, in a recent report, the financial services company Macquarie Group had slashed Paytm’s 12-month target to ₹450 apiece from ₹700 in January.
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Macquarie, in January, had also cut Paytm’s 2020-21 (FY21) to 2025-26 (FY26) revenue growth estimates to 23% on a compounded annual growth rate basis from 26% earlier. Moreover, the financial services group said that Paytm has limited potential to scale distribution business for merchant loans.
However, in the stock exchange notification today, Paytm said that its lending business scaled to 6.5 million loan disbursals during the quarter ended March 2022, aggregating to a total loan value of ₹3,553 crore or $474 million, registering an exponential growth of 417%.
Paytm said its offline payments business also accelerated with 0.9 million devices deployed in this quarter, taking the total number of devices deployed to 2.9 million.
Total merchant payment volume (GMV) processed through Paytm’s platform during the March quarter aggregated to approximately ₹2.59 trillion or $34.5 billion, marking a growth of 104% on year, Paytm said. Moreover, the company’s ‘super app’ witnessed 70.9 average monthly transacting users (MTU), which Paytm claimed was a growth of 41% on year.
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