Loss-making Paytm now wants to focus on profitability, here’s how

Paytm's parent company One97 Communications Limited felt it was the right time to get listed on Indian stock exchanges. It was India's biggest-ever initial public offering (IPO) at the time, which was met with the biggest-ever drop on opening day. Paytm has since lost two-thirds of its value, but its founder is not deterred and aims to convince investors with a new focus.

Vijay Shekhar Sharma in an interview with Bloomberg said that the company is shifting its attention from growth to profitability. The company is on course to achieve $1 billion in annual revenue by the end of this fiscal year in March 2023.

"We're earnestly chasing the $1 billion goal," Sharma told Bloomberg at Paytm's new headquarters in Noida. "For me, the public listing was a sort of graduation, and taking Paytm to break-even and to profits gives me a clarity of purpose."

The Paytm founder wants to win back investors after its dismal stock exchange performance. Paytm share price plummeted in the months following its debut at Rs 1950. It touched an all-time low of Rs 510 in May 2022 and has been steadily rising since then to around Rs 717 as of July 28th, 2022. This collapse also caused a cascading effect for other startups in India as investors became more cautious and selective with their investments.

How does Paytm plan to become profitable?

For Sharma, the biggest way to win back investors is to offer clarity regarding Paytm's business model. Demystifying Paytm's revenue structure is one way to regain the trust of investors, Sharma told Bloomberg. He summarises Paytm's diverse offerings in two short lines, "Paytm is in the business of payments, and it sells loans."

Paytm has been expanding both its payments and lending and the company has been transparent with its data, revenue streams, and load disbursals to keep investors optimistic. Sharma confidently told Bloomberg that the numbers have beaten internal expectations.

"Paytm is in the business of payments, and it sells loans."

The company has also taken some cost-saving measures such as cutting down on spending and possibly exiting from a "pricey" cricket sponsorship, among other things. "Earlier the team used to be like, 'Cricket sponsorship? that's so cool!' to now, 'How much money can we save if we gave that up?'"

For Paytm, becoming profitable will be a challenging task and skeptics are not very optimistic about Shekhar's mission. However, if Paytm manages to beat the odds, that would be a very different case study indeed.