By Siddhant Mishra
Paytm shares surged 7.06% on Friday, following the positive commentary by the management in an analyst call. The share price rose by Rs 35.40 to close at Rs 536.90.
On Thursday, the company, in an analyst call, said bank partnerships to sell products are a “great opportunity”, calling FASTag and co-branded credit cards a success. It identified EMI aggregation on personal guarantee and remittances as the next big opportunity. Paytm said it would focus on ramping up loan and stock brokerage offerings.
Small credit, it said, is best served and collected digitally, with its payments customer base offering a large addressable market for such loans. “Postpaid drives credit volumes with small loan amounts of good quality. On disbursement, we typically make 2.5-3.5% of loan value upfront,” said the company. The company expects these margins (sourcing and collections) to trend upwards with scale.
The company said it runs a commerce business with cash profitability, enabling merchants to get more business by helping them sell tickets, gift vouchers, deals, etc. Paytm’s commerce GMV (gross merchandise volume) was Rs 2,021 crore.
Paytm’s cost of building the platform was Rs 401 crore in Q2FY23, with an expected 10-15% YoY increase on its current base, while the cost of expanding the platform — marketing and sales — which is directly driven by revenue opportunity, was Rs 309 crore in the last quarter. The company believes in improving profitability, despite investments in sales and marketing.
Paytm had a strong second quarter, with a 76% YoY surge in revenue to Rs 1,914 crore. After its Q2 results, it “remains ahead” of its September 2023 profitability guidance.