Incorporated in 2000, One97 Communications Limited (Paytm) is India’s leading digital ecosystem for consumers and merchants. Paytm offers ‘Payment Services’, ‘Commerce and Cloud Services’, and ‘Financial Services’ to 33.3 crore consumers and over 2.18 crore merchants registered with them, as of June 30, 2021.
Their 2-sided (consumer and merchant) ecosystem enables commerce, and provides access to financial services, by leveraging technology to improve the lives of their consumers and help their merchants grow their businesses.
In 2009, the company launched the first digital mobile payment platform, "Paytm App" to offer cashless payment services to customers and now, it became India's largest payment platform and the most valuable payments brand with a total brand value of US$6.3 billion as per Kantar Brands India 2020 Report.
The app enables customers to do cashless transactions at stores, top-up mobile phones, online money transfers, pay bills, access digital banking services, purchase tickets, play games online, buy insurance, make investments, and more. However, merchants can use the platform for advertising, online payment solutions, offering products to customers, and loyalty solutions. They have created a payments-led super-app, through which they offer their consumers innovative and intuitive digital products and services. They offer their consumers a wide selection of payment options on the Paytm app, which includes:
- Paytm Payment Instruments, which allow them to use digital wallets, sub-wallets, bank accounts, buy-now-pay-later, and wealth management accounts.
- Major third-party instruments, such as Debit and Credit Cards and Net Banking.
Offer services such as Paytm Wallet, Paytm QR, Paytm Soundbox, Gold investments, and Fixed Deposit, Paytm Postpaid, Merchant Cash Advance and FASTag.
Outlook & Valuation
The revenues of the company have been on the declining side, in FY19 revenue was at ₹3,579 cr while in FY21 it was at ₹3,186 cr. Also, it is a loss-making company with a loss of ₹(4,230.9) cr in FY19 which however reduced to ₹(1,701) cr in FY21.
We are in an era of new-age businesses where we have seen many unicorns getting listed recently. It is really arduous to provide a valuation for such types of companies. We expect only leaders will survive over a period of time and only a few such companies will be wealth creators while many can be wealth destroyers. As India is on the verge of digitalization, we may expect the company to get benefited from the same also new acquisition and strengthening of the PAYTM ecosystem from the IPO will be beneficial for the company. Thus we assign a "SUBSCRIBE" rating only for aggressive investors.
KEY MANAGERIAL PERSONNEL
- Vijay Shekhar Sharma is the Founder, Managing Director, and Chief Executive Officer of the company, and the Chairman of the Board. He oversees the Company's key strategic efforts including engineering, design, and marketing.
- Madhur Deora is the President and Group Chief Financial Officer of the company. He has been associated with the company since October 3, 2016.
- Manmeet Singh Dhody is the Chief Technology Officer, Payments. He has been associated with the company since April 1, 2020.
- Vikas Garg is the Chief Financial Officer of the company. He has been associated with the company since May 21, 2014, and was previously associated with the company from August 25, 2008, to September 28, 2012.
- Sudhanshu Gupta is the Chief Operating Officer of Paytm First Games Pvt Ltd, their Subsidiary. He has been associated with Paytm First Games Pvt Ltd since June 1, 2018.
- Bhavesh Gupta is the Chief Executive Officer of the Lending Business of the company. He has been associated with the company since August 4, 2020.
- Renu Satti is the Chief Operating Officer of Offline Payments of the company. She has been associated with the company since October 11, 2006.
- Praveen Kumar Sharma is the Managing Director and Chief Executive Officer of Paytm Payments Services Ltd. He has been associated with the company since September 2, 2019.
- Harinderpal Singh Takhar is the Chief Executive Officer of Paytm Labs Inc, their Subsidiary. He has been associated with Paytm Labs Inc. since June 2013.
COMPETITIVE STRENGTHS
- India's leading digital payment service platform.
- Strong brand identity with a brand value of US$6.3 billion.
- Large customer base with 333 million total customers, 114 million annual transacting users, and 21 million registered merchants.
- Paytm Super-app to access a wide range of digital payment services over mobile phones.
- Strong macro tailwinds.
- Increasing pace of digitization.
- Digital payments in India evolving rapidly
- Under-penetration and rising digitization of financial services
KEY CONCERNS
- They have a history of net losses and we may not be able to achieve profitability.
- The ongoing COVID-19 pandemic and measures intended to prevent its spread have had, and may continue to have, a material and adverse effect on the business and results of operations.
- The company may suffer if they are unable to retain existing customers, acquire new customers, grow the amount of consumer transactions, or increase in the client acquisition expenses.
- Their payment services account for the majority of their income. Their attempts to broaden their service offerings and market reach may not be successful, which might have a negative impact on their income.
- The business might suffer if they do not maintain or develop their technological infrastructure.
COMPARISON WITH LISTED INDUSTRY PEERS
There are no listed companies in India that engage in a business similar to that of the Company. Accordingly, it is not possible to provide an industry comparison in relation to the company
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