paytm: Founder Vijay Shekhar Sharma blames bad timing for Paytm’s flop listing – The Economic Times

Clipped from: https://economictimes.indiatimes.com/tech/startups/founder-vijay-shekhar-sharma-blames-bad-timing-for-paytms-flop-listing/articleshow/88853045.cmsSynopsis

Paytm founder Vijay Shekhar Sharma said the company he cofounded went public at a time when the market was spooked by various factors, which affect the pricing.

Bengaluru: As the stock of One97 Communications, the parent company ofPaytmNSE -3.30 %, continued to fall on Wednesday, founder Vijay Shekhar Sharma blamed bad timing for its poor IPO and listing.

In conversation with Sequoia Capital’s managing director Rajan Anandan at IAMAI’s India Digital Summit 2022, Sharma said the company he cofounded went public at a time when the market was spooked by various factors, which affect the pricing. It was one of Sharma’s first public appearances since the company’s disastrous market debut in November last year.

“Payment has a derivative revenue line item in financial services and is driven by credit. The success of Paytm will depend on what we do with monetisation, led by financial services. 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… People underestimate the size of payments revenue,” he said. He also claimed Paytm was seeing higher revenues at lower costs.

“People are underestimating the compounding impact that the customer base on this platform has. We have spent much less than any year ever… Our business has never looked better in terms of this,” Sharma added.

On Monday, brokerage firm Macquarie slashed its target on One97 Communications from Rs 1,200 to Rs 900, a 58% downside from the issue price of Rs 2,150. The brokerage firm said Paytm’s payments business accounts for 70% of overall gross revenues and hence any regulations capping charges for digital payments could affect this.

Sharma said that the contribution margin for payments continued to be in the double digits for Paytm. He added that quarterly revenue from payments has hit $140 million, if the merchant services it provides are included. This revenue is expected to grow at least 50% to 60% year-on-year, he added.

“Credit is the most monetisable financial service. Bajaj Finance has been there for 30-32 years, Paytm processes more loans than Bajaj today, in less than three years… For our credit business, we should be benchmarked against only one guy and that is Bajaj (Finance). We (Paytm) should be looked at for the scale we deliver in terms of total loans, value of loans and quality of loans,” said Sharma.

“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 said that 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.

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