Paytm Is Dissecting Their Business Model, But Share Price Fell Again

Paytm's top executives have had an over-the-phone meeting with its investors and analysts recently and discussed the company's business model. Additionally, they have raised questions about monetization. In the very recent past, Paytm, India's largest initial public offering (IPO) faced a major downturn in the stock market. Paytm's executives have discussed their revenue streams and profitability prospects in the call.

On the call, Madhur Deora, CFO said, "Strong momentum in revenue growth will continue," while contribution margins have jumped "with clear trends towards continued year-on-year improvements." Kranthi Bathini, equity strategist with WealthMills Securities Pvt. Ltd, stated, "It is in the growth phase so costs will remain high but it will have to draw a line on how much cash they can burn." Bathini added, "It is a big brand and it is important they create synergies between businesses. It will have to ensure that productivity starts showing up in earnings going forward."

According to a report, One97 Communications, which is the parent of the digital payments giant, traded below 17% in the last week below its offer price. Last weekend, One97 communication's report mentioned that they faced losses to Rs. 4.74 billion in the July-to-September quarter on a YoY basis, amid rising expenses, while revenue increased more than 60%.

Bhavesh Gupta, Head, Lending Division said, "India has a large opportunity for credit and the scale-up can be huge from where we stand today." Gupta later added, "Paytm is in both the consumer lending and merchant lending, we have a two-sided opportunity."

However, even today Paytm's share prices fell by 4.24% in the NSE, till the market was open, on November 29. Hence, One97 communication Ltd.'s last traded share price was quoted at Rs. 1,706.95. Paytm's executives will have to dissect their business model again. Significantly, Paytm has raised $2.5 billion in the company's IPO.

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