Even so, revenues from payments and financial services which houses its entire gamut of digital offerings have hardly grown in the past five years. To be sure, the revenue drop was driven by its commerce and cloud vertical, while revenues from payments and financial services grew 10.6%. But Paytm’s revenues dropped in FY21, resulting in a net loss of ₹1,701 crore. It also gets a cut from merchants in addition to charges on using its point-of-sale (PoS) machines. Other revenue sources are selling third-party products and the new line of buy now, pay later (BNPL) credit. To elaborate, Paytm gets a cut every time a consumer does a money transfer, or pays through the app for purchases or utility bills. The company earns money by charging fees from its customers and merchants for every digital transaction they make on its platform. Paytm must get more bang for its buck with every transaction, which is easier said than done. This means that mere volume growth won’t cut it. What’s more, Unified Payments Interface (UPI), introduced in 2016, has brought down transaction costs for Indians, making digital payments the cheap commodity they are. As mentioned earlier, India’s digital space has exploded after 2016. The company has 40% market share in mobile transactions, dwarfing most large competitors.īut volumes growth gives less benefits when the service offered is a cheap commodity in an intensely competitive market. Paytm’s ticket to digital glory lies in its relentless growth of transaction volume. This gives the company an edge, according to analysts. “Paytm is the only payments company in India that, together with their affiliates, owns each layer of the payment stack," said analysts at Axis Capital Ltd in a note. But demonetization resulted in an explosion of digital payments providers in India. To be sure, the company leapfrogged in digital payments after the government rendered 86% of currency notes worthless through demonetization in November 2016. Perhaps it is this growth that big investors are betting on. Analysts believe that Paytm’s strength is its ability to keep up the pace of customer and merchant acquisition over the past several years. It is a market leader in mobile payments, wallets and its merchant base. Its platform has 337 million registered customers and 21.8 million merchants. We expect Paytm to continue being the largest payments and fintech ecosystem in India,” it added.What do investors get with an exposure to Paytm? Formally known as One97 Communications Ltd, Paytm started as a mobile wallet company and has morphed into a one-stop shop for all digital payments. “With increased financial discipline (rare in the hyper-competitive payments space), it is on track to break even in 12-18 months. We believe the next stage of growth will be led by financial services, particularly delivering seamless credit tech products to consumers and merchants,” the Bernstein report said. “Paytm has come a long way from a simple digital wallet business to an integrated payments ecosystem. In a pre-IPO primer, investment research firm Bernstein said today that Paytm is likely to break even in 12-18 months given financial discipline and strategic investments. It is the most valuable Indian unicorn with a valuation of $16 billion according to the Hurun India Unicorn Index 2020. It now also offers other services such as Paytm insurance and Paytm Money. Paytm has recently diversified beyond payments and financial solutions for consumers, offline merchants, and online platforms. have been shortlisted to manage the floatation of the fintech’s issue of shares. Even after the board clearance, the preparation, including the filing of documents and getting approvals can take five-six months, a company source told The Hindu.Ī person in the know told Bloomberg confidentially that Morgan Stanley, Citigroup Inc., and JPMorgan Chase & Co. However, the exact timing of the issue would depend upon market conditions. The board of the parent company, One97 Communications Limited, is scheduled to meet on Friday to greenlight the IPO, tentatively being planned for the Diwali festival season around November. The firm is targeting a massive valuation of $25 billion to $30 billion. Paytm, the Indian payments giant backed by investors such as Berkshire Hathaway Inc., SoftBank Group Corp., and Ant Group Co., is weighing an IPO worth $3 billion says a Bloomberg report.
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