Paytm aims to break even in under 2 years

Bengaluru

PAYTM, the Indian digital payments pioneer grappling with a regulatory audit of its data-management systems, expects to break even on an operating basis over the next year-and-a-half.

The startup backed by SoftBank Group and Jack Ma's Ant Group predicts it will become profitable in 6 quarters on an operating earnings before interest, tax, depreciation and amortisation basis. That forecast followed a doubling of its gross merchandise value to 2.59 trillion rupees (S$46.6 billion) in the 3 months ended March, the company said in a statement on Wednesday (Apr 6).

The brand that listed as One97 Communications, which competes with the likes of Google Pay and Walmart's PhonePe, climbed more than 3 per cent after revealing its projection. It averaged almost 71 million transacting users in the quarter, it added.

Paytm founder Vijay Shekhar Sharma has been struggling to win back investor support since the company pulled off India's largest-ever initial public offering (IPO) in November, touted by some as a symbol of India's growing appeal as a destination for global capital. While the offering raised a record-setting US$2.5 billion, shares plunged 27 per cent on debut and have dropped more than 70 per cent from the 2,150 rupee IPO price.

Investors have grown increasingly wary of its longer-term growth prospects and potential regulatory tangles. In March, the central bank barred the company's lending venture from accepting new customers, citing concerns that it may have shared local users' data abroad, including with Chinese-based entities. Paytm has yet to appoint an independent firm to audit its practices. The company has shed about 70 per cent of its value since its IPO.

The 43-year-old Sharma, from the small central Indian town of Aligarh, founded One97 about 2 decades ago and won acclaim nationwide as a small-town-boy-made-big.

But analysts including those at Macquarie Capital Securities (India) have questioned his ability to turn Paytm - which also counts Warren Buffett's Berkshire Hathaway as an investor - into a profitable business anytime soon. BLOOMBERG