In one of his first public appearances since the company’s disastrous market debut in November last year, Sharma, in a conversation with Sequoia Capital managing director Rajan Anandan at IAMAI’s India Digital Summit 2022, said that One97 went public at a time when global markets were spooked by various factors that affected its listing performance.
“Globally, we probably went in at a time when QE, free money and many other parameters brought a little spook out of the market,” he said. “South American companies are over 70% down. That’s not the reason completely. That’s a macro reason.”
Sharma said the business is doing well, driven by payments revenue. “The success of Paytm will depend on what we do with monetisation led by financial services,” he said. “Payment is a revenue line item which is growing massively. This quarter we are talking about $100 million revenue from payments which is like a sizable revenue.”
He claimed Paytm was seeing higher revenues at lower costs. “People are underestimating the compounding impact that the customer base on this platform has,” he said. “We have spent much less than any year ever… Our business has never looked better.”
One97 stock closed at Rs 1,081.45 on the BSE on Wednesday, down 3.41% from the previous closing. Paytm’s market cap is down to $9.49 billion, as of Wednesday, from its peak private market valuation of $16 billion.
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On Monday, brokerage firm Macquarie had slashed the target price of Paytm’s parent to Rs 900 from Rs 1,200. This was 58% lower compared to the issue price of Rs 2,150.
Macquarie said Paytm’s payments business accounts for 70% of overall gross revenues and hence any regulations capping charges for digital payments could affect the company.
Sharma said the contribution margin for payments continued to be in the double digits for Paytm. He said quarterly revenue from payments has hit $140 million if the merchant services it provides are included, and its revenue is expected to grow 50% to 60% year-on-year.
“Credit is the most monetisable financial service,” Sharma said.
He said Paytm, after just three years in the business, now processes more loans than Bajaj Finance has been there for 30-32 years. “For our credit business, we should be benchmarked against only one guy and that is Bajaj (Finance),” he said. “We (Paytm) should be looked at for the scale we deliver in terms of total loans, value of loans, and quality of loans.”
“The problem in our country has been with the companies which give loans—banks and NBFCs. The wrong metric they chase is the loan size. The better metric that they should chase is the quality of loans,” he said.
Earlier this week, Paytm had said loans disbursed through its platform jumped five times year-on-year to 4.4 million loans during the December quarter, as a part of its public disclosures with Indian exchanges.
According to the company, the value of loans disbursed through its platform during the December quarter was Rs 2,180 crore, an increase of 365% year-on-year. The average size of a loan provided by Paytm is currently around Rs 5,000.