Paytm Aims To Turn Profitable In Next One–Two Quarters, Says CFO

One 97 Communications Ltd., the parent company of Paytm, plans to turn profitable in the next one or two quarters, Group Chief Financial Officer Madhur Deora said.

"We are very close to Ebitda and ESOP profitability and this is without UPI incentive," Deora said in a post-earnings analyst call. "We will get to PAT once Ebitda before ESOP is profitable in the next one or two quarters sequentially and that is what we are marching towards."

The company aims to be efficient as an organisation and drive higher revenue growth, according to Deora.

While it is witnessing some headwinds with respect to the current credit cycle and slowdown in personal loans, the work that it has put in this year in becoming efficient should translate into fantastic operating leverage, Deora said. "The goal is to have double-digit Ebitda margin relatively soon and have that translate into substantial amount of PAT."

For the quarter ended December, Paytm reported a net loss of Rs 208.3 crore against a profit of Rs 928.3 crore in the previous quarter. However, the loss was still better than analysts' expectations, with Bloomberg consensus estimates predicting a loss of Rs 332 crore.

The bottom line marks an improvement over the corresponding period last year when Paytm reported a loss of Rs 221.7 crore.

Despite the continued loss, the company's revenue showed positive growth, increasing by 10% to Rs 1,828 crore for the quarter, surpassing the expected Rs 1,660 crore.

However, it is noteworthy that the net loss is not a very accurate reflection of the company's performance, especially as the net profit from the July-September quarter was largely driven by a one-time gain from the sale of its events and movie ticketing business to Zomato Ltd. This deal, worth Rs 1,345 crore, skewed the comparison for that quarter.

When factoring out one-time gains, Paytm's core operations appear to be improving, as its Ebitda loss narrowed to Rs 222 crore, compared to Rs 403 crore in the previous quarter.

The management also said that the company is seeing more interest from lending partners and that merchant partners are growing and collection efficiency has also gone up.

While the company has provided for all default loss guarantees given to lending partners, they remain cautious towards unsecured loans.

The company expects steady growth on merchant loans and expects personal loan disbursements to be better in the next financial year as compared to this year.

"We continue to see increased interest from lenders to partner using the DLG model for both merchant and personal loans, which will help to increase disbursements with the existing partners and expand partnership with new lenders," the press release said.

Outstanding assets under management for DLG portfolios as on Dec. 31 was Rs 4,244 crore as compared to Rs 1,651 crore a quarter ago.

Merchant loans distribution continues to see strong growth with a distribution of Rs 3,831 crore in the October-December period as against Rs 3,303 crore a quarter ago.

When asked about when the company would make a come back into the wallet business, Chief Executive Officer Vijay Shekhar Sharma said that they want to continue with wallet business and have been waiting to hear back from the Reserve Bank of India on Paytm Payments Bank ban.