Vijay Shekhar explains why Paytm shares are down; expects EBITDA to breakeven soon

Paytm parent One97 Communications, on Wednesday, released its operating metrics for the fourth quarter. On that occasion, founder and CEO Vijay Shekhar Sharma said that the “team’s phenomenal execution is evident in acceleration of monthly transacting users”. He also predicted operating EBITDA to breakeven in the next six quarters, well ahead of the estimates by analysts.

“While we will publish our fiscal 2022 financial results in due course, we are encouraged by our business momentum, scale of monetisation and operating leverage. We expect this to continue, and I believe we should be operating EBITDA breakeven in next 6 quarters (i.e. EBITDA before ESOP cost, and by the quarter ending September 2023), well ahead of estimates by most analysts. Importantly, we are going to achieve this without compromising any of our growth plans,” Sharma said in a statement.

The Paytm CEO acknowledged that due to volatile market conditions for high growth stocks, Paytm shares are significantly below the IPO price. He, however, assured that the entire team is “committed to build a large, profitable company and to create long-term shareholder value”.

He added that his stock grants will be vested to him only when the market cap has crossed the IPO level on a sustained basis.

Sharma said that they continue to expand their team and hire talent from both technology and finance industries.

The company said that the lending business has scaled to 6.5 million loan disbursals, which is a 374 per cent on-year growth, during the quarter ended March. This aggregates to a total loan value of Rs 3,553 crore, which is a year-on-year growth of 417 per cent.

The offline payments business has accelerated by 90,000 devices this quarter, taking the total number of deployed devices to 2.9 million in three years. The company said that it currently deploys about 1,000 devices per day. They also expect a rise in the number of merchants eligible for loans.

Average monthly transacting users (MTU) of Paytm Super App for the quarter has grown 41 per cent year-on-year to 70.9 million.

Moreover, there has been over 104 per cent year-on-year increase in the GMV for the fourth quarter of FY 2022 at Rs 2.59 lakh crore.

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