The entry of Paytm shares in the stock markets has not been good. Shares of One97 Communications, a financial services provider under the Paytm brand name, have fallen more than 40 per cent since the listing. The reason for this is doubts about the revenue growth of the company. Brokerage firm MacIavry had said that Paytm’s share price does not match with the revenue growth prospects. Because of this, it reduced the target price of the stock to Rs 700 in January. Aparna Iyer had a comprehensive conversation with Paytm’s Chief Financial Officer Madhur Deora on this whole matter. Let’s know the highlights of the interview.
Is it true that Paytm’s ability to generate revenue is declining?
this is not right. Our payment services to merchants have grown by 117 per cent year-on-year. Payment services to consumers have grown by 60 per cent year-on-year. I know investors were a little skeptical about this two or three quarters ago because we didn’t have the data to show. There has also been an epidemic of corona in the last two years. So it was difficult to show normal growth in payments. We are now seeing revenue from payment services to merchants and consumers exceeding Rs 1,000 crore in the December quarter. Today in India the revenue of any company in Fintech is Rs 10000 crores.
Do you think that multiple payment options can run simultaneously and they will not harm each other?
You look at the data. Credit cards, debit cards and UPI all together are showing good growth. The data suggests that Wallet, Card and UPI – all three are growing. Merchants are accepting the payment instrument that the consumer is offering. I would not say that all modes of payment will remain, some of them may be replaced by an upgraded version. For example, will INPS be replaced by UPI in the near future? can it happen.
Also read: Paytm Shares Jump 3% After Q3 Results, Should You Buy Now?
How will your stand on UPI?
UPI is very good in terms of new customers and new merchants. This is also good for merchants, as they transact at zero cost. As customers get used to digital payments. Their needs also keep on increasing. People want convenience and better products. People can show interest in credit offering products. Consumers use different payment options for different needs. Our non-UPI GMV (Gross Merchandise Value) has grown 77 per cent year-on-year. This has a direct impact on revenue growth. It seems to me that customers using UPI on Paytm will be more likely to take credit products from us.
If the revenue is strong then why is there a quarterly loss?
Losses have increased because we have to pay an accounting charge after the IPO. This is a non-cash charge and no one is paying for it. If this charge (ESOPs) is omitted, our EBIDTA has increased. We will be EBIDTA-positivity.
Can you tell us something about your cost?
Our biggest cost item is the payment processing charge. Our contribution margin has increased from 9 per cent to 31 per cent. Our indirect expenses have increased by 52 per cent. We are not stopping investment in any field. We are investing in the things that matter. It happens that you deduct your marketing expenses before listing the company, but we did not do this.
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