Paytm Shifts Focus To 'Mature' Profitability Benchmark

Paytm parent One97 Communications Ltd. is refocusing its business strategy to emphasise profit after tax as a mark of profitability, said Founder Vijay Shekhar Sharma. Paytm has undergone a significant transformation over the past year, evolving into a merchant-centric platform, he said during the company's 24th Annual General Meeting on Thursday.

The focus is now on net profit, rather than just Ebitda before ESOPs, Sharma said.

The digital payments platform saw its loss widen to Rs 840 crore in the quarter ended June, from Rs 551 crore in the previous quarter. The company had reported an operating loss of Rs 792 crore during the period under review, against Rs 223 crore in the preceding three months.

The company also plans to apply for a payment aggregator licence in due course, he said. With a focus on payments and cross-selling financial services, the firm is committed to building a profitable, sustainable business that generates free cash flow, Sharma said.

The company will leave a big mark on the payments industry through advanced merchant technology. It remains dedicated to addressing India’s needs and is poised to integrate AI as a core element of business strategy, the Paytm founder said.

Over the past year, the team has transformed the platform into a comprehensive business model, tailored for merchants. The company has conducted a thorough review of business and compliance processes, he said.

Sharma estimated the country's merchant base to reach up to 10 crore.

By collaborating with banks and non-banking financial companies, Paytm provides loans to these merchants, generating fees as a key component for the company's business model, the founder said. This approach not only supports the growth of small businesses but also strengthens Paytm's revenue through merchant loan services, he said.

Shares of One97 Communications Ltd. rose as much as 2.61% before paring gains to trade 0.44% higher at Rs 669.45 apiece, as of 10:04 a.m. This compares to a 0.62% advance in the NSE Nifty 50.

The stock has fallen 22.57% in the last 12 months. Total traded volume so far in the day was the twice its 30-day average. The relative strength index was at 72, indicating the stock is overbought.

Out of 18 analysts tracking the company, five maintain a 'buy' rating, six recommend a 'hold' and seven suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies a downside of 27.4%.