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Paytm on track for Ebitda profits in 2023: CEO

In a note to investors in Paytm’s annual report, Managing Director and Chief Executive Vijay Shekhar Sharma said on Friday the company is on track to achieve operational profitability by September 2023.

“I believe that over the past year, our team has done a great job of massively improving our revenue and contribution profits, allowing us to invest in our payment and credit businesses while reducing our losses. We are seeing excellent momentum in our business and are on track to achieve operating profitability (Ebitda before ESOP cost) by the quarter ending September 2023,” added Sharma.

One97 communications, the parent company of fintech major Paytm, on Friday announced a lower net loss of Rs 1,441 crore for the financial year ended March 31, 2022 (FY22), compared to a loss of Rs 1,704 crore during the previous year. According to the company’s annual report filed with the stock exchanges, Paytm’s operating revenue increased significantly by 77% year-on-year in FY22 to Rs 4,974 crore, compared to revenue from 2,802 crore rupees declared in the previous year.

However, the fintech company’s total expenditure for FY22 rose 59% year-on-year to Rs 7,601.1 crore from Rs 4,783.0 the previous year.

Additionally, Paytm’s Ebitda margin improved to -30.5% in FY22 from -59% in FY21. Its net profit margin also improved to -48.2% in FY22 from -60.7% in FY21.

A large portion of Paytm’s revenue in FY22 came from its payments and financial services business, which grew 83% year-on-year to Rs 3,858 crore in FY22, from Rs 2,109 crore in FY21. This includes recognized revenue from payment services offered to consumers and merchants, and recognized revenue from financial service partners or consumers in the form of financial service offerings , which mainly include loans.

The company’s revenue from commerce and cloud services grew 59% year-on-year to basic Rs 1,105 in FY22 from Rs 693 crore in FY21.

Paytm’s sharp increase in revenue from the payment services business is attributed to growth in its monthly transaction user base (MTU), which stood at 70 million in the fourth quarter of 2022. In the same quarter l Last year, MTU’s base amounted to only 50.4 million.

The big fintech’s lending business continued to grow in FY22. Its lending partners disbursed more than 15.2 million loans through the platform in FY2022, growing 478% from FY21. Loan value increased 441% to 7 Rs 623 crore in FY22 compared to Rs 1,409 crore in FY21.

Last month, Paytm revealed that its Buy Now Pay Later (BNPL) lending model contributed more than 60% to its lending business, followed by the personal lending and merchant lending segments. Meanwhile, the Reserve Bank of India (RBI) has ordered issuers of non-bank prepaid payment instruments (PPIs) not to load PPI instruments using lines of credit, which is likely to have a negative impact on the BNPL sector.

Shares of Paytm opened at Rs 720 apiece on Friday morning on the exchanges but closed as low as Rs 705 at the end of the day. After its weak debut in stock markets in November 2021, the company’s share price had taken a hit and fallen more than 54% since its listing. Paytm was initially listed at an issue price of Rs 2,150 per share last year.