Paytm CEO will get stock grants once m-cap recovers to IPO levels

Paytm founder and chief executive officer (CEO) Vijay Shekhar Sharma will receive his stock grants only after the company’s market capitalisation (m-cap) stabilises at its initial public offering (IPO) level, the financial technology (fintech) major said on Wednesday.

Paytm’s stock price has been in free fall since its IPO at Rs 2,150 apiece, with m-cap at around Rs 1.4 trillion — plunging 76 per cent to a lifetime low of Rs 520 on March 23, when m-cap dropped below Rs 34,000 crore.

Since then, the company’s share price on the BSE has recovered some value and closed at Rs 637 on Wednesday.

Yet, the Paytm stock will have to zoom 238 per cent for it to be on a par with the IPO price.

Apart from a global meltdown in technology stocks, Paytm has also faced the ire of analysts who have questioned its earnings from loan disbursements and a business model spread thin across Cloud services, gaming, and e-commerce.

Brokerage firm Macquarie has consistently downgraded Paytm’s target price (TP) since its listing in November last year.

It again cut the fintech major’s TP to Rs 450 in March with an ‘Underperform’ rating.

In a letter to shareholders on Wednesday, Paytm CEO said the company is likely to be operating earnings before interest, tax, depreciation, and amortisation (Ebitda)-break-even in the next six quarters.

“We should be operating Ebitda-break-even in the next six quarters (i.e., Ebitda before employee stock ownership cost, and by the quarter ending September 2023), well ahead of estimates by most analysts.

"Importantly, we are going to achieve this without compromising with any of our growth plans,” wrote Sharma.

“Against the backdrop of volatile market conditions for high growth stocks globally, our shares are down significantly from the IPO price. Rest assured, the entire Paytm team is committed to build a large, profitable company and create long-term shareholder value,” he added.

The company also said that the number of loans disbursed through its platform grew 374 per cent to 6.5 million loans in the March quarter, compared to the year-ago period.

Meanwhile, the value of loans disbursed was Rs 3,553 crore — growing 417 per cent year-on-year (YoY).

Total merchant payment volume (gross merchandise value) processed through the platform during the fourth quarter of 2021-22 (FY22) aggregated to approximately Rs 2.59 trillion (or $34.5 billion) — marking a YoY growth of 104 per cent.

In the December quarter, Paytm saw its revenue increase 89 per cent to Rs 1,456 crore YoY, whereas net loss widened 45 per cent to Rs 778 crore.

However, the company had said its contribution profit (defined as revenue from operations less payment processing charges, promotional cashback and incentives, and other direct costs) improved to 31.2 per cent of revenue in the third quarter (Q3) of FY22, from 8.9 per cent in Q3 of 2020-21.