India's Paytm September quarter net loss widens

[NEW DELHI] India's One 97 Communications, the parent of fintech firm Paytm, said on Saturday (Nov 27) its net loss for the 3 months through September widened by 8.4 per cent as expenses rose.

Paytm, reporting its earnings publicly for the first time since listing this month, reported a consolidated net loss of 4.74 billion rupees (S$86.6 million) compared with 4.37 billion rupees in the same period a year earlier.

Revenue rose 49.7 per cent to 11.35 billion rupees.

"We have maintained the growth momentum in our payments services business, expanded our financial services business aggressively and are on our way to pre-Covid volumes for Commerce and Cloud services," Paytm's management said in a statement, adding that the company was well funded.

Paytm counts China's Ant Group and Japan's SoftBank Group among its backers. It raised US$2.5 billion in what was India's biggest initial public offering (IPO) this month, but made a dismal debut on the stock exchanges last week.

The stock has recouped some of its initial losses but remains 17% below its issue price.

"Paytm faces stiff challenges in its customer acquisition engine, which would slow down its revenue growth in the core payments business," brokerage JM Financial said in a note to clients a day ahead of Paytm's earnings. "We find valuations rich and the path to profitability fraught with high execution risks in context."

The company said its gross merchandise value from transactions other than a state-backed peer-to-peer payments network, popularly called UPI, grew 52 per cent in the quarter from a year earlier.

Paytm competes with Google and Walmart's PhonePe in India's digital-payments market, and all of these companies offer peer-to-peer payments on UPI. The company said it was "well funded" with a cash equivalent and investable balance of 110 billion rupees including through the initial public offering.

Founder and chief executive Vijay Shekhar Sharma has said investors will need time to understand the company's business.

Founded in 2010 as a platform for adding credit to mobile phones, Paytm grew rapidly after US ride-hailing firm Uber Technologies listed it as a quick payment option in India. Its use jumped in 2016 when India suddenly banned high-value currency notes, boosting digital payments.

Paytm, headquartered on the outskirts of capital New Delhi, offers services including merchant payments, insurance and gold sales, movie and flight ticketing, and bank deposits and remittance.

REUTERS