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Vijay Shekhar Sharma blames bad timing for Paytm's flop listing

by Akshat Mathur 12 Jan 2022

Vijay Shekhar Sharma blamed the bad timing for the hot response to Paytm's first public offering and a faint mention last year, amid rising prices from the company he built almost two decades ago.

One97 Communications Ltd., the parent company of Fintech Pioneer of India, entered the stock market at a time when the market feared various factors and this affected prices, said Sharma Sequoia Capital CEO Rajan Anandan of IAMAI's India Digital Summit 2022 on Wednesday. This is one of the first public appearances Sharma has made since Paytm's devastating market debut in November last year.

"Paytm's success will depend on what we do with the monetization that is driven by financial services. Payment is something that further increases the yield threshold," he said at the event. "We talked about $ 100 million in payment revenue this quarter as a huge revenue ... People underestimated the size of payment revenue." He also added that Paytm recorded higher revenues at lower costs.

"People underestimate the growing impact of this platform on the customer base ... We've spent and less than every year since ... Our business has never looked better," he said. and Sharma.

Brokerage company Macquarie lowered One97 Communications' target price from Rs 1,200 per share to Rs 900 per share on Monday. This is 58% lower compared to the Paytm issue price of Rs 2,150. Macquarie said that Paytms represents 70% of total gross revenues and that the company could therefore be affected by any regulations that charge for digital payments.

On Wednesday, Paytms' market capitalization was $ 9.49 billion, compared to the highest private market valuation of $ 16 billion. ETtech analysis: behind a bad Paytm IPO and its constant estimates

Sharma said the contribution margin for payments is still doubling compared to Paytm. Quarterly payment revenues reach $ 140 million if the shopping services it provides are included, he said. Sales are expected to grow by at least 50 to 60% year on year, he added.

"Credit is the most expensive financial service. Bajaj Finance has existed for 30-32 years, Paytm has been processing more loans than Bajaj now, in less than three years ...," Sharma said. "Because in our credit business we have to compare with only one person, and that is Bajaj (Finance). We (Paytm) have to look for the benchmark we provide in terms of total loan amount, loan amount and loan quality.

"The problem with our companies is the companies that provide loans - banks and the NBFC. The bad metric they get is the size of the debt. The better metrics they will strive for is loan quality, ”he said.

Last week, Paytm said the number of loans disbursed through its platform had quadrupled last year to 4.4 million in the December quarter, as part of the release of information on Indian stock exchanges.

According to the company, the amount of loans disbursed through its platform in the third quarter was Rs 2,180 million - a year-on-year increase of 365%. The average loan amount provided by Paytm is currently around Rs 5,000.

On Wednesday, Paytm shares on the BSE fell 3.22% to Rs 1,083.40, while the Sensex benchmark ended the day 0.88% higher at 61,150.04 points.

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