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IPO underperformed due to external market factors: Paytm's Vijay Shekhar Sharma

IPO underperformed due to external market factors: Paytm's Vijay Shekhar Sharma

Talking to Sequoia Capital’s managing director Rajan Anandan at the India Digital Summit, Sharma pulled up a dashboard to suggest fintech firms across the globe suffered at the public market during the time.

IPO underperformed due to external market factors: Paytm's Vijay Shekhar Sharma IPO underperformed due to external market factors: Paytm's Vijay Shekhar Sharma

Digital payments behemoth Paytm’s founder and CEO Vijay Shekhar Sharma said the company’s much anticipated initial public offering (IPO) in early November received an underwhelming response primarily because of the timing of the issue and other general market factors that affected fintech firms globally. 

Talking to Sequoia Capital’s managing director Rajan Anandan at the India Digital Summit, Sharma pulled up a dashboard to suggest fintech firms across the globe suffered at the public market during the time.  

“Globally, we probably went in at a time when Quantitative easing (QE), free money and many other parameters brought a little bit of spook out of the market in terms of pricing…. We are a payment company. Payment has a derivative revenue line item in financial services, driven by credit. The success of Paytm will be what we do off the monetization led by financial services because payment is a revenue line item which is massively growing. This quarter we are talking in the range of $100 million from payments,” he said. 

Adding $40 million from merchant services, Sharma said the payments business is a $140 million (quarterly) vertical today which he expects to grow minimum 50-60 per cent year-on-year.

He said the company has achieved contribution margin profitability for its payments business while financial services unit led by credit business is growing significantly. Quoting previously declared numbers, Sharma said Paytm disbursed 4.4 million loans worth Rs 2,180 crore during the December quarter. 

“I can say this profoundly to everyone our business has never looked better than this, better in terms of scale, better in terms of revenue, better in terms of profits, better in terms of contribution (margin), better in terms of long-term compounding gains,” he added.

One97 Communications Ltd., the parent company of digital payments platform Paytm, made a weak debut on November 18 last year. The share closed 27.25per cent or Rs 585.85 lower at Rs 1,564 compared to the IPO price of Rs 2,150 on BSE. Earlier, the stock made its debut at Rs 1,950, a discount of 9.3 per cent to the issue price. On NSE, the share closed 27.44 per cent lower at Rs 1,560 compared to the issue price. The share closed at the lowest point of the session on both bourses. 

Commenting on the funding frenzy in the market, Sharma said Indian start-ups will continue to witness significant capital inflow for the next two to three years before a correction hits the ecosystem.

“Just like life and death are realities, it is clear that there will be a wave of incredible funding, it comes every 10 years…. (There will be) two or three more years of money and after that it will sort out,” he said. 

Sharma attributed the incredible funding boom primarily to the soft monetary policy of the US government and advised young entrepreneurs to take their chances now.  

Beyond financial services, Sharma said he sees large growth opportunities for electric vehicles (EVs) and healthcare solutions. 

“The overall EV ecosystem - supply, demand, servicing, delivery, or electric charging etc. - is waiting to scale in unprecedented numbers. It’s an opportunity to reset the automobile sector, which is one of the largest industries. It would open up new players and opportunities. Second, healthcare is contemporary, healthcare is underestimated and healthcare is where customers are ready to spend money,” he added. 

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