Not short-term gains, but long-term value creation: Why Paytm investors should look beyond current stock value | The Financial Express

Not short-term gains, but long-term value creation: Why Paytm investors should look beyond current stock value

Paytm is looking to create long-term value for its shareholders.

Not short-term gains, but long-term value creation: Why Paytm investors should look beyond current stock value
Paytm — has transformed India with its multipayment architecture and two-sided ecosystem of consumers and merchantsnetisation in payments, financial services cross-selling, ticketing recovery and rising ad monetisation.

By Anuj Shukla

In 1997, Jeff Bezos — the much famed Amazon Founder and CEO — wrote a letter to his shareholders where he spoke about creating an enduring franchise, one that would reinvent what it means to serve customers by unlocking the internet’s power. This was in 1997, when Amazon’s much talked about platforms — Prime, Marketplace, Alexa, or AWS had not even been invented. But shareholders in Amazon took a bet on Bezos, and his capabilities and his vision. This resulted in wealth creation for not just Bezos himself but also for Amazon’s millions of shareholders. 

Closer home in India, there’s another company that’s taking a bet on redefining the Indian internet ecosystem and more importantly, the way we pay and transact. Paytm — has transformed India with its multipayment architecture and two-sided ecosystem of consumers and merchants, and is setting up a unique legacy in India with its path breaking initiatives. 

Now, Paytm is looking to create long-term value for its shareholders. The company’s recent investor relations report points out that Paytm has achieved nearly 90% topline growth in the midst of a global financial meltdown, while most major companies in India and around the globe are struggling with profitability. This is an important message for investors as Paytm remains on track to achieve profitability despite the slowdown. 

In fact, a sizeable majority of top brokerages like Goldman Sachs, Citi, JP Morgan, Morgan Stanley, ICICI Securities remain bullish about Paytm stock, citing its consistently strong revenue growth over the past three quarters. The company’s own annual report has highlighted with some interesting points: 

• It’s a win-win situation for its key stakeholders – consumers and merchants. To make payments, consumers can use net banking and cards, and Paytm payment instruments like wallets, UPI, and more. Then what ensures high customer engagement and value generation is the easy access to lending products like Paytm postpaid, merchant loans and lending loans, which the company offers. 

• Robust growth in financial services segment coupled with subscription revenues, high ticketing sales and account level rationalization for merchants has led to huge monetisation gains for the fintech giant. 

• Considering high speed tech transformation and rapid digital adoption pan India in online transactions services are expected to grow from 250-300 million in 2020-21 to 700-750 million by 2025-26. These comprise online banking, mobile top-ups and in-store payments—which are significant for Paytm. The company is also seeing strong opportunities with rising demand in retail loans, MSME loans, and BNPL. Paytm has also pioneered the mobile and QR payments revolution in India and has been a leading innovator in the fintech space and a familiar brand across households. Paytm has paved the way to the digital payments ecosystem that people enjoy today. With more than 28 million merchants on board, the company has almost 80 million monthly transacting users. With its strong tech innovations, proven deliveries and supportive policies, Paytm is more than capable of defining the future.

Anuj Shukla is an independent journalist.

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