06 December 2023
In the wake of its IPO, Paytm faced a series of formidable challenges, from fierce market competition to the pressures of a high-stakes public offering. However, CEO Vijay Shekhar Sharma displayed proactive leadership, implementing cost-cutting measures and pivoting the company's focus toward profitability. These strategic steps, including the integration with the Open Network Digital Commerce (ONDC), are now bearing fruit, with the company poised to achieve EV/EBITDA breakeven by the third quarter of FY23.
But that's not the only positive news coming from the Paytm camp. Paytm Money, a wholly-owned subsidiary of Paytm, has recently achieved a remarkable feat in FY23 by doubling its scale and turning profitable.
👉 Paytm Money Financials:
- Company's revenue has surged twofold over the past year, from Rs. 64.1 Cr. in FY22 to Rs. 131.8 Cr. in FY23.
- Despite doubling its revenue, the company has effectively managed its expenses. While expenses stood at Rs. 90 Cr. in FY22, they decreased to Rs. 79.5 Cr. in FY23, highlighting efficient cost management.
- Paytm Money has achieved positive EBITDA, signifying an improved financial health. The company had an EBITDA of -13.39% in FY22, which has now turned positive at 33.19% in FY23.
- Company's efficiency in generating revenue has also improved significantly. It now spends approximately 47% less to generate Re. 1 of revenue compared to the previous year. This reduced cash burn is a positive sign.
- Paytm Money has excelled in delivering impressive Returns on Capital Employed (RoCE), transforming from -20.84% in FY22 to an excellent 40.46% in FY23. This indicates increased operational efficiency and financial effectiveness.
👉 Major Factors Driving Paytm's Revival:
1. Soundbox: Paytm's Soundbox has proven to be a game-changer, surpassing competitors with a deployment of ten times more devices among merchants. From 6 lakh installations in FY22, Soundbox installations surged to a remarkable 58 lakh in FY23. The primary aim was to enhance the financial tracking capabilities of local Kirana stores, resulting in an astonishing 866% growth in Soundbox installations.
2. Loan Disbursals: Paytm has capitalized on its data resources by monetizing them through collaborations with institutions to offer financial products such as loans, credit cards, and insurance to its extensive user base. The company's statistics reveal an impressive 357% growth in its loan book, surging from Rs. 2,181 Cr. in FY22 to approximately Rs. 9,958 Cr. in FY23. Assuming a conservative 10% margin on these loans, this strategy has resulted in a substantial 356% increase in revenue.
In summary, Paytm's remarkable turnaround story showcases the resilience and adaptability of the company in the face of challenges.
Paytm is not only regaining its financial footing but also setting the stage for future growth and success👍