One97 Communications Ltd., the entity that operates the digital payments service Paytm, reported a wider loss last quarter as the company tries to recover from a disastrous initial public offering in November.
The company reported a loss of 7.8 billion rupees ($104 million) for the December quarter, compared with a loss of 4.74 billion rupees a quarter earlier. Revenues rose 34% from the previous quarter to 14.6 billion rupees, the company said in a statement.
Paytm and founder Vijay Shekhar Sharma have been trying to get back on track after an IPO that raised $2.5 billion, but was followed by a vertiginous plunge in the stock price. Investors paid 2,150 rupees a share in the offering only to watch them plummet, closing on Friday at 953.3 rupees.
Analysts at Macquarie Capital Securities (India) Pvt. made a hotly contested call just before the IPO by initiating coverage with an underperform rating. The analysis, from Suresh Ganapathy and Param Subramanian, proved prescient, but perhaps not bearish enough. Their price target was 1,200 rupees.
Investors will scrutinize the latest quarterly numbers for signs that Paytm can move toward profitability. Payment services to consumers and merchants increased 60% and 117%, respectively, while the company’s partners distributed 4.4 million loans valued at about 21.8 billion rupees during the quarter.
The stock swoon has proven painful for early backers of Paytm, as its market cap has dropped to 618 billion rupees. 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., which holds about 17.5% of the shares, invested in 2017 at valuation of about $7 billion, the people said.
Sharma founded the Noida-headquartered One97 almost two decades ago. The son of a school teacher, he grew up in a town in Aligarh, in central India, and studied engineering in New Delhi, where he taught himself English. He entered digital payments in 2014 and his business took off when India canceled 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. – Bloomberg.
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Also read: Paytm stock rout is proving to be an expensive lesson for early backers Berkshire, SoftBank