One 97 Communications, Paytm parent, saw its shares rise two percent in the morning session; Here’s why
Paytm AGM: One 97 Communications, Paytm parent, saw its shares rise two percent in the morning session as CEO and founder Vijay Shekhar Sharma reiterated the intention to reapply for a payment aggregator (PA) licence to Reserve Bank of India in due course.
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“We will apply for payment aggregator license to RBI in due course,” said Vijay Shekhar Sharma.
Paytm recently got the Finance Ministry’s approval to invest in its payment services business. “We would like to inform you that PPSL has received approval from the government of India, Ministry of Finance, Department of Financial Services, vide its letter dated August 27, 2024, for downstream investment from the company into PPSL.
“With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to existing partners,” Paytm filing said earlier.
The Reserve Bank of India (RBI) had rejected Paytm’s PA licence permit application in November 2022 and instructed the company to reapply with Press Note 3 compliance under the foreign direct investment norms.
As per Press Note 3, the government had made its prior approval mandatory for investments from nations that share land borders with India. “We would like to inform you that PPSL has received approval from the Government of India, Ministry of Finance, Department of Financial Services, vide its letter dated August 27, 2024, for downstream investment from the Company into PPSL,” the company said in a filing.
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On Achieving PAT Profitability
The Paytm CEO announced the company’s commitment to achieving PAT profitability during the Paytm AGM.
“India stands at a stage where the whole world is talking about the country’s payments and its digital revolution,” added Sharma. “We, as a nation, have leapfrogged to become leaders in financial technology, and now we have the opportunity and obligation to extend that leadership into AI technology. Paytm is committed to lead the industry with our advanced AI capabilities.”
Today, Paytm’s focus is on its core business – payments and distribution of financial services. However, the firm sees an opportunity to cut down costs with the adoption of AI .
“My board members advised me to shift the focus from EBITDA before ESOP as a benchmark to PAT (Profit After Tax). We recognise that EBITDA before ESOP, due to its large ESOP charge, provides only a partial picture of our financial health. Our commitment is now to focus on PAT, reflecting our drive towards true profitability,” added Sharma.
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For the first quarter of FY25, One 97 Communications reported its Q1FY25 consolidated net loss widened two-and-half times to Rs 839 crore from Rs 357 crore a year ago, as the company continues to cope with the impact the RBI curbs shutting the payments bank business.
The fintech firm’s revenue from operations declined 36 percent to Rs 1,502 crore in Q1FY25 as against Rs 2,342 crore in the year-ago period.
In response to escalating losses, PayTM had launched an aggressive plan to save Rs 400-Rs 500 crore annually on employee costs. Further, the ESOP cost was down at Rs 247 crore as many were lapsed on the back of layoffs and resignations.
At 10 am, Paytm shares were quoting Rs 681.05 on the NSE, higher by 2.2 per cent compared to the previous session’s closing price.
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