Paytm, an Indian fintech company based in Noida, Uttar Pradesh, aims for profitability within two quarters after reporting a smaller loss. The company is seeing recovery in its payments business and anticipates stable growth in merchant loans.
India’s Paytm, a leading fintech company based in Noida, Uttar Pradesh, has announced plans to achieve profitability within the next one to two quarters. This comes after the company reported a smaller sequential third-quarter adjusted loss. The recovery in Paytm’s payments business, particularly after the winding down of its payments bank unit, played a key role in this progress.
During an analyst call, Madhur Deora, Paytm’s CFO, shared that the company expects to reach profitability in terms of profit after tax (PAT) once its earnings before interest, taxes, depreciation, and amortization (EBITDA) before employee stock options cost become positive. He mentioned that this could be achieved in the upcoming quarters.
For the third quarter ending December 31, Paytm posted a loss of 2.04 billion rupees ($23.6 million), a significant improvement from the 4.07 billion rupees loss in the previous quarter. While this period saw a continued loss, Paytm had reported its first-ever profit in the prior quarter, thanks to a one-time gain from selling its ticketing business to Zomato.
Paytm’s EBITDA, which is a key metric for the company, was negative 410 million rupees in the third quarter, compared to a larger loss of 1.86 billion rupees in the previous quarter.
The company faced challenges when the Reserve Bank of India (RBI) shut down Paytm’s banking unit in January 2024, citing persistent compliance issues. This raised concerns over the stability of Paytm’s digital payments business. However, analysts like Rahul Jain, Vice President of Research at Dolat Capital, have expressed confidence that the company’s fundamentals are improving and regulatory hurdles are largely behind it.
Paytm’s revenue from operations increased by 10.1% sequentially to 18.28 billion rupees, with financial services revenue, which includes its loan business, rising 34%. The company also saw an 8% growth in its payments services business. Although Paytm’s lending partners are cautious about unsecured lending, the company expects steady growth in merchant loans.
Additionally, Paytm has decreased its expenses by 31% year-on-year and 1% sequentially, mainly due to reductions in marketing and employee-related costs. The company has also raised its default loss guarantee to 3.5 billion rupees from 2.25 billion rupees for its lending partner, SMFG India Credit, covering loans disbursed to merchants.
