Softbank-backed Paytm hopes to break even before the end of 2023

Shares of India's largest digital payments service provider remain roughly 70% below its IPO price

Vijay Sharma, founder and chief executive of Paytm, is confident about the company's future prospects. Leslie Pableo / The National

Paytm, India's largest digital payments service provider, aims to break even on an operating basis by September 2023, as it struggles to appease investors following a disappointing initial public offering in November 2021.

The company, which is backed by Japan's SoftBank Group and China's Ant Capital, said on Wednesday that its monthly transacting users exceeded 70 million in the fourth quarter of its fiscal year that ended on March 31, 2022, and projected strong growth prospects.

Paytm's shares were up 5 per cent to 642 rupees ($8.5) at 11.24am UAE time, following the announcement.

"We are encouraged by our business momentum, scale of monetisation and operating leverage," said Vijay Sharma, founder and chief executive of Paytm.

"We expect this to continue, and I believe we should be operating Ebitda [earnings before interest, taxes, depreciation and amortisation] break even in the next six quarters (ending September 2023), well ahead of estimates by most analysts," Mr Sharma said in a note to shareholders.

"We are going to achieve this without compromising any of our growth plans."

Paytm's $2.5 billion IPO on the Bombay Stock Exchange, India's biggest, was touted as a bellwether that the South Asian country's appeal to global capital was growing. However, the company, which listed as One 97 Communications, lost over a quarter of its value on its trading debut.

It has also been hit by regulatory challenges. Last month, the Reserve Bank of India barred Paytm's Payments Bank venture from accepting new customers. The action was based on certain “material supervisory concerns” and the restrictions will continue pending a comprehensive audit of its information technology systems, the Indian central bank said.

The company's shares remain about 70 per cent below the 2,150-rupee listing price.

Despite the IPO debacle, the company is sticking to its business plan that scaled up because of the “necessary capital” the company acquired, Mr Sharma told The National in December.

“The best part about the IPO is that we welcomed [a larger] number of people as shareholders. We are seeing tremendous uptake of the credit business, which is bringing money to the bottom line,” he said.

On Wednesday, Paytm confirmed that its adoption by merchants had increased to 2.9 million devices and that its platform has disbursed more than 6.5 million loans per quarter.

"Against the backdrop of volatile market conditions for high growth stocks globally, our shares are down significantly from the IPO price," Mr Sharma said in the note.

"Rest assured, the entire Paytm team is committed to build a large, profitable company and to create long-term shareholder value. Aligned with this, my stock grants will be vested to me only when our market cap has crossed the IPO level on a sustained basis."