Will Paytm Survive?

On 25th July 2022, I started to value Paytm. I have seen many interviews of Vijay Shekhar Sharma, read the Fintech sector reports, listened to all the Con Calls of Paytm, read the annual report & DRHP file, and many others given PPTs by the company. After studying these things I thought I should share this with you.

MY STORY OF PAYTM

Paytm was started in 2010 in Noida by Vijay Shekhar Sharma. In the early days, growth was very negligible because of the low Penetration of

smarts phones & Internet users in India. However, the story for Paytm take a golden turn when demonetization happened in India, and Paytm became a star of online money transfer. In addition to that, the entry of Jio and other initiatives of the government like UPI(Unified Payment Interface), PPI (Prepaid Payment Instruments), and payment banks helped Paytm a lot to develop its story. In the period of 2019- 21, It witnessed a period of no growth in revenue because of Covid-19 as its commerce & cloud and P2M (payment to merchants) segments are highly correlated with economic activities in the economy.

In the FY ended 22, Company recovered very sharply and witnessed a 50% increase in revenues and a decline in losses as % of revenue.

The biggest opportunity for Paytm is the ecosystem that it is building. For instance, it is in many businesses such as Payment transfer, payment aggregators, Advertising, Ticket booking, Online lending, Loan collection, Financial Services, Credit card issuer, Payment bank, Cloud service providers, etc. Furthermore, It is in dozens of businesses but still losing thousands of crores rupees since 2010.

The main focus of the company is the Lending & P2M ecosystem.

Paytm will become profitable in a few years.

The industries in which Paytm operates its businesses are tremendously high growth industries such as Paytm money provides demate A/c ( only 4% of Indians invest in the stock market), Online lending ( huge potential as most small business merchants still depend on unorganized borrowing, mobile payments (expected to grow 50% CAGR in next 5 years), and etc.

Paytm will remain a market leader in the payment to merchant segment and It will become profitable in the next few years and maintain a healthy Operating margin (like its global peers). The growth drivers will remain in the company such as rising smartphone users, digital payments, a market for online lending, and e-commerce.

According to my story, Paytm will not only survive but thrive in the future.