Paytm: Jack Of All Trades, Master Of None?

Asia's Tech News Daily

After the recent stellar debut of Zomato, Policybazaar, Nykaa and Freshworks at the stock markets, Paytm’s lackluster performance has become the talk of the startup town, albeit in a negative way. The shares of One97 Communications, the parent company of mobile payments and financial services app Paytm, fell over 27 per cent from the IPO issue price of INR 2,150 on day one and saw a further 13 per cent decline on day 2. 

Paytm: Jack Of All Trades, Master Of None?

Paytm Facebook

While the company saw a small recovery on Tuesday, it is still far from compensating for the losses of the first two days. Analysts believe that Paytm’s poor performance was a result of the valuation offered by the company. “The inflated valuation, which was driven by an aspiration to be the largest IPO in India, as well as a large float of $2.5 billion, out of which more than 50 per cent was ‘offer for sale’ by existing investors and promoters, was one of the key reasons for the unfavorable investor sentiment we saw towards the IPO,” said Pearl Agarwal, founder and managing director, Eximius Ventures.

Further, the high valuation was coupled with a complex business model which stopped institutional investors and high net worth individuals (HNIs) from subscribing to the IPO. While Nykaa was oversubscribed by nearly 82 times, Paytm was oversubscribed by only 1.89 times. 

Paytm’s USP, which is being a strong contender to create a super app, turned out to be a rather weak point in its IPO debut. The company was launched in 2009 as a digital payment platform to enable cashless payments to consumers. Today, it has created an ecosystem that integrates payments, credit, insurance, merchants, wealth management, e-commerce services, among others, with a user base of more than 333 million consumers and nearly 21 million merchants. 

However, despite this, Paytm is still not a market leader in any particular segment. “Paytm has a diversified business model, operating in multiple markets but not being a significant market leader, this fact coupled with the high valuation and burn was disliked by investors,” said Ankur Bansal, co-founder and director, BlackSoil.

Also, none of Paytm’s businesses is profitable yet and there is no clarity on when and how Paytm will start becoming profitable.  According to Macquarie Research’s report, Paytm has been a cash-burning machine, spinning off several business lines with no visibility on achieving profitability. “Paytm has drawn in equity capital of INR 190 billion since its inception, of which only 70 per cent (INR 132 billion) has gone towards funding losses. Paytm has a problematic business model. It generates very low revenue for every dollar invested or spent towards marketing. This is especially problematic for a low-margin consumer-facing business where competition across each vertical is only increasing,” it said.  

“The issue of profitability needs to be addressed. So far, the company has burnt cash to build topline, but has not yet demonstrated how they will deliver a positive bottom line,” said Manoj Kumar, co-founder, Val-More Action Advisory. Also, though the company enjoys a large share in overall payments made by individuals to merchants,  it is way behind PhonePe and Google Pay in terms of grabbing the UPI market. 

Furthermore, the fintech space is strongly controlled by the government and there are many regulatory risks that may derail the company’s plans. In fact, the Macquire report has said that the company’s Chinese link may affect its banking license prospects. “In our view, Paytm is not a practical contender for a universal/small finance bank license. The main reason in our view is that Chinese-controlled firms, Alibaba and Ant, together still own close to 31 per cent stake in One97,” it said. 

The increasing risk of inflation and rising interest rates have led central banks to reconsider their expansive monetary policies. “The recent bull market and IPO frenzy were driven by excess liquidity in the system due to expansive monetary policies by several central banks across the world. But as the central banks are becoming cautious and reversing their stance on monetary policies, public markets too are being sluggish, as is visible since the last few days,” said Agarwal. 

It is no small feat that Paytm has acquired a user base of 333 million and 21 million merchants, said Kumar, but at the same time, the company has not been able to deliver a positive bottom line over 12 years of their existence is something to watch out for.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

TVS Capital Funds: Empowering Next-generation Entrepreneurs

TVS Capital was founded in 2007 with the aim of identifying exciting next-generation entrepreneurs and empowering them by providing not just capital but also capability capital which includes the networks ... Read more »

Top 10 hashtags of 2021, what India tweeted

#Covid19: In the summer of 2021, India was hit by the deadly second wave of COVID-19, that paralysed the country’s public healthcare system. People took to social media in search ... Read more »

Storyboard18 | Can EV charging stations become the future of outdoor advertising?

(Representative image) The formats of advertising at the EV stations need to be engaging. For example, interactive ads that can draw the customer in by sending a message when the ... Read more »

The Chennai Angels: A Sector and Geography Agnostic Fund

The Chennai Angels (TCA) was formed in 2007 by a group of prominent successful entrepreneurs from TiE Chennai, who felt that they needed a funding arm to support the companies ... Read more »

iPhone 14 Pro models likely to come without the notch

Apple is said to opt for LTPO OLED displays with a 120Hz ProMotion tech for the iPhone 14 Pro and iPhone 14 Pro Max. iPhone 14 specifications have started to ... Read more »

Samsung Galaxy S22 price could be similar to Galaxy S21

The new Samsung Galaxy S22 Ultra has a curved edge design with an S-Pen slot built into the device Samsung Galaxy S22 launch is expected to take place on February ... Read more »

Will the Mateverse and GameFi be a new battlefield for blockchains?

There have been many metaverse cryptocurrency projects that are doing very similar things as Meta but they are doing it in more of a decentralized capacity as their metaverses aren’t ... Read more »

How to Find Your Calling as an Entrepreneur

What path is best when establishing a business? There are, arguably, two paths that an entrepreneur can take. The first being to follow the needs of the market and building ... Read more »

Finland Prime Minister, caught clubbing after Covid exposure, apologises

Finland Prime Minister Sanna Marin’s Foreign Minister had tested positive for coronavirus. Finland‘s prime minister came under sustained criticism on Tuesday after it was revealed she stayed out dancing until ... Read more »

Realme 9i specifications listed online; 5000 mAh battery, 50MP triple-camera on the cards

Ahead of the launch, the leaked design renders suggest that Realme might take some design cues from its premium smartphone, the GT Neo 2, for the Realme 9i. Realme 9i ... Read more »

From Porn Star Martini to Matar Paneer: Check out the top 10 most Googled recipes of 2021

Porn Star Martini and Matar Paneer featured in Google Year in Search 2021. (Image credit: Greedy Gourmet and Shweta in the Kitchen) When Google India released their list for the ... Read more »

Samsung Galaxy S21 Plus, Galaxy S21 price in India drops offline

Samsung Galaxy S21+ (Image: Pranav Hegde) Samsung Galaxy S21 price in India has been slashed offline, courtesy of a card offer. The Galaxy flagship smartphone from Samsung can be purchased ... Read more »

Elon Musk says nuclear power plants shouldn't be shut down unless...

Elon Musk’s partner, singer Grimes, too had expressed a similar on the shutting down of the California nuclear power plant. Billionaire Elon Musk feels that nuclear power plants should be ... Read more »

How Software Developer Freelancers are Filling the Skill Gap

Freelancers are a vital part of the tech industry. They take on a wide range of tasks and cover the gaps in IT teams. With the rapid digitization of businesses, ... Read more »

Video: General Bipin Rawat's helicopter moments before crash, last visuals

Image credit: News18 A 20-second video has emerged of the Indian Air Force (IAF) helicopter that carried General Bipin Rawat and 13 others, that crashed near Coonoor in Tamil Nadu, ... Read more »

5 Challenges Confronting Every Business and Their Personal Brand

In a world where businesses compete for attention, entrepreneurs should prioritize establishing an image that stands out. Personal branding remains vital, needing thoughtful planning to attract the target audience. To impact ... Read more »

Employee Feedback: Our Biggest Asset in the War on Talent

The war on talent has never been more prevalent — or more confusing. Between mid-March and mid-April 2020, shifts worked in the U.S. dropped by more than a third as ... Read more »

Better.com CEO Vishal Garg apologises after laying off 900 via Zoom, says, 'blundered the execution'

Better.com CEO Vishal Garg had cited the market, performance and productivity as reasons behind the decision to lay off employees in the United States and India. (Image credit: LinkedIn) The ... Read more »

5 Key Habits of Great Leaders

A great leader isn’t a great leader because they run their own company or department. Nor are they great because they excelled in their industry early on in their career ... Read more »

Is Waterstone Financial (WSBF) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to ... Read more »

3 Reasons Why Builders FirstSource (BLDR) Is a Great Growth Stock

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market’s attention and deliver solid returns. But finding a growth stock ... Read more »

4 Reddit Penny Stocks To Buy For Under $5 As Trump Stocks Jump

Trump Penny Stocks To Watch Right Now The debut of former President Donald Trump’s Truth Social media platform has caused a stir in the stock market today. Once again, news ... Read more »

Here Comes Santa Claus - 3 Strong Buy Stocks to Boost Your Portfolio

After a tumultuous last two weeks, the bulls have made a stand this week as the major indexes are back in the green for December. This month normally gives investors ... Read more »

Matson (MATX) is an Incredible Growth Stock: 3 Reasons Why

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market’s attention and produce exceptional returns. But finding a great growth stock is ... Read more »

3 Reasons Why Endava PLC Sponsored ADR (DAVA) Is a Great Growth Stock

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market’s attention and produce exceptional returns. However, it isn’t easy to find a ... Read more »

Saia (SAIA) is an Incredible Growth Stock: 3 Reasons Why

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market’s attention and produce exceptional returns. But finding a great growth stock is ... Read more »

How Callon Petroleum (CPE) Stock Stands Out in a Strong Industry

One stock that might be an intriguing choice for investors right now is Callon Petroleum Company CPE. This is because this security in the Oil and Gas – Exploration and ... Read more »

Is Bluegreen Vacations Holding Corporation (BVH) Stock Outpacing Its Consumer Discretionary Peers This Year?

The Consumer Discretionary group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Has Bluegreen Vacations Holding Corporation (BVH) been one ... Read more »

Top Research Reports for Netflix, salesforce & Novo Nordisk

Wednesday, December 8, 2021  >>, Click to get this free report, ConocoPhillips (COP): Free Stock Analysis Report, Zacks Investment Research” title=”Earnings Trends, Earnings Preview, click here>>>, Click to get this ... Read more »

5 Penny Stocks To Buy According To Analysts & Targets Up To 341%

Penny Stocks To Buy According To 4 Analysts Right Now If you’re looking for penny stocks to buy, you might be looking for specific trends. We’ve covered many of these ... Read more »

3 Reasons Why Growth Investors Shouldn't Overlook Donaldson (DCI)

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market’s attention and produce exceptional returns. But finding a growth stock that can ... Read more »

Is the Options Market Predicting a Spike in Rite Aid (RAD) Stock?

Investors in Rite Aid Corporation RAD need to pay close attention to the stock based on moves in the options market lately. That is because the Apr 14, 2022 $3.00 ... Read more »

Ómicron: 5 things you should know to protect yourself

These last two weeks the news cycle has been dominated by the appearance of the new variant of COVID-19 Omicron . Its name sounds like a science fiction movie from ... Read more »

Learn about 29 mantras and phrases from successful Latino founders

” It’s okay to celebrate success, but it’s more important to pay attention to the lessons of failure ” is one of Bill Gates ‘ best-known mantras. Like him, hundreds ... Read more »

13 tips to have more willpower

In 2013, researchers from Stanford University published a work in the prestigious journal Neuron where they identified an area of the brain (the ” anterior cingulate cortex “, located approximately ... Read more »

Working With Mother Teresa, She Was Inspired by Older People's Compassion. So She Started a Caregiving Business That Hires Them.

When you’re in the business of caring for others, nothing beats having Mother Teresa on your résumé. Kiran Yocom has just that; she worked with the sainted nun for more ... Read more »

4 Factors From Childhood That Are Strong Indicators of Success

I have long believed that success starts earlier than most people think. A lot of people assume that success begins when stakes are involved, often at University or in the ... Read more »

5 Benefits of Cloud Technology for New Startups

As entrepreneurs, we need to look into different cloud options before making a final decision. Because there are many services available, we have to be mindful to not engage in long commitments ... Read more »

Want to Build a Brand That Will Win? You Need to Start With These Questions.

I see it all the time. I’ll be scrolling through a pitch deck for some buzzy new brand, and something just isn’t adding up. The design might be great. The ... Read more »

What Is a Buy-Sell Agreement and Why Is It Vital for a Successful Partnership?

For entrepreneurs starting or building a business with a partner or partners, one of the must-haves is a buy-sell agreement. This agreement establishes protection for all parties and the company ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic