One97 Communications Ltd., the company behind Paytm, a digital payments service, reported a larger loss in the fourth quarter as it tries to recover from a disastrous initial public offering in November.
The company reported a loss of Rs 780 crore in the December quarter, up from Rs 474 crore the previous quarter. According to a statement, revenue increased 34% from the previous quarter to Rs 1,460 crore.
Paytm and its founder, Vijay Shekhar Sharma, have been attempting to get back on track following an IPO that raised $2.5 billion but was followed by a precipitous stock price drop. Investors paid Rs 2,150 per share in the initial public offering, only to see the stock plummet to Rs 953.3 on Friday.
Just before the IPO, analysts at Macquarie Capital Securities (India) Pvt. Ltd. made a contentious call by initiating coverage with an underperform rating. Suresh Ganapathy and Param Subramanian’s analysis was prescient, but perhaps not bearish enough. Their target price was Rs 1,200.
Investors will be looking for signs that Paytm is on the road to profitability in the latest quarterly results. Consumer and merchant payment services increased by 60% and 117 percent, respectively, during the quarter, while the company’s partners distributed 4.4 million loans worth Rs 2,180 crore.
Paytm’s market cap has dropped to Rs 61,800, making the stock swoon painful for early investors. Berkshire Hathaway Inc. invested in One97 when the company was valued at more than $10 billion in 2018, and T. Rowe Price Group Inc. invested at a $16 billion valuation the following year, people familiar with the matter have said. SoftBank Group Corp. of Japan, which owns about 17.5 percent of the stock, invested in 2017 at a $7 billion valuation, according to the people.
Sharma founded the Noida-headquartered One97 almost two decades ago. The son of a school teacher, he grew up in Aligarh, Uttar Pradesh, and studied engineering in New Delhi, where he taught himself English. He entered digital payments in 2014 and his business took off when India cancelled high-value currency notes toward the end of 2016.
The market has grown increasingly competitive however. Global technology giants such as Amazon.com Inc., Meta Platforms Inc. and Alphabet Inc. are working to expand in India, along with local startups.
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