Ever since One 97 Communications Ltd, the parent company of Paytm, went public in India, it has had a bumpy ride. Today, the fintech company fell as low as 4.6% during Indian pre-market hours, after recovering almost 17% on 24th November.
The share price hit a low of $22.1 on National Stock Exchange against the previous closing price of $23.15. However, by the end of the market session, it gained over 2% and closed at $22.54. It is still about 21% below its initial offering price of 2150.
The fall happened after Paytm reported a wider on-year net loss of $63.31 million for its second quarter due to a rise in payment processing costs.
But, its revenue from operations surged to $141.18 million for the same quarter. Paytm also said its expenses jumped 37.1% to $196.17 million.
Payments and financial services revenue increased by 69% to $ 109.53 million, while commerce and cloud services revenue increased by 47% to $ 31.69 million.
In his introductory remarks, Founder and Chief Executive Vijay Shekhar Sharma stated, “We are totally dedicated to head down and execute and provide outstanding outcomes quarter-on-quarter, year-on-year ahead of that.”
Mr. Sharma said in an earnings call for investors on Saturday that “several of the line items in our payment business are not just profit generating but also free cash flow generating.”
Following its first quarterly earnings, foreign brokerage Macquarie kept its underperform rating on Paytm and kept its price objective at Rs 1,200. According to the brokerage, the stock trades at 22 times FY23 price to sales, which is a high valuation.
Paytm also announced that its online Payment Aggregator business has been transferred to Paytm Payments Services to comply with the RBI’s new Payment Aggregators and Payment Gateways standards, which will take effect on 1st January 2022.
E-commerce marketplaces cannot continue providing PA services under the standards, but they can if the PA service is separated from the e-commerce marketplace business.