Fintech start-up One97 Communications on Wednesday said it should break even at an operating Ebitda (earnings before interest tax depreciation and amortisation) level in the next six quarters.
In a regulatory filing, it said the Ebitda break-even (before ESOP costs) could be achieved by the September 2023 quarter, well ahead of estimates of most analysts. The company’s growth plans, however, would not be compromised.
“Aligned with this, my stock grants will be vested to me only when our market cap has crossed the IPO level on a sustained basis,” Vijay Shekhar Sharma, founder and CEO, wrote in a letter to shareholders.
One97, which owns the fintech platform Paytm, has been haemorrhaging in the public markets after its much-celebrated initial public offering in November 2021. Though the stock went up by 5% to Rs 640 apiece after the announcement, it is still lower by 70% from the issue price of Rs 2,150.
Sharma said in the filing that “our shares are down significantly from the IPO price, against the backdrop of volatile market conditions for high growth stocks globally”.
In mid-March, Macquarie cut its price target for the stock to Rs 450 from the earlier level of Rs 700. The brokerage argued that, to gain scale and size, fintechs need to go beyond distribution and lend for which they need licences. However, the probability of One97 getting a small finance bank (SFB) licence, it noted, is “significantly lower now”.
The brokerage was alluding to the regulator’s move to bar Paytm Payments Bank from on-boarding new customers. Media reports at the time had suggested the Reserve Bank of India (RBI) was uncomfortable with the Chinese ownership in One97 at 25% levels. The company had said it was taking prompt steps to comply with RBI’s directives. Experts say RBI’s regulations on digital payments and Buy Now Pay Later (BNPL), and stricter KYC and compliance norms will impact all fintechs and could lower their unit economics and growth prospects.
Meanwhile, One97 has sold 6.5 million loans in Q4FY22, recording a 48% quarter-on-quarter growth with the value of loans disbursed increasing by 63% q-o-q to Rs 3,553 crore. Moreover, it is working in partnership with marquee lenders to further scale its loan disbursement and servicing business. The total merchant payment volume (GMV) processed through the Paytm platform during Q4FY22 aggregated approximately Rs 2.59 trillion, marking a year-on-year growth of 104%.
