PayTM (One 97 Communications Ltd)

Starting a thread for Discussion on PayTM.

PayTM started as a mobile value-added service company and later started mobile and utility payment along with e-commerce. However, in the last few years Paytm has transformed itself into a complete financial service company.

PayTM’s business is bifurcated into 3 segments:

  1. Payment Services: According to research firm Paytm is the largest payment platform in India with a gross merchandise value of 4 lakh crore in FY 21, which is 40% of total payment transaction volume.

  2. Commerce and Cloud Services: Such as your ticket booking, travel, entertainment, gaming, food delivery, ride-hailing, and so on. It also provides merchants with software and cloud services for various aspects of their business, such as your billing, ledger, vendor management, customer promotion, catalog and inventory management, and so on.

  3. Financial Services: mobile banking, lending, insurance, and wealth management services for consumers and merchants. For example, within mobile banking Paytm has launched Paytm payment bank, where Paytm has around 49% equity that provides an option to open saving account, current account, salary account, FD and debit card. As of March 21, Paytm payment bank had 64 million savings accounts.

Company Financials:

Revenue: 3597 in FY19 and 3186 in FY21.
Profit: It has been in losses for the last 3 years. In FY 19 The loss was 4230 crore, in FY 20 It was 2942 crores, and in FY 21 It was 1701 crore.

The company IPO’d at a price of 2150 which has now come down to 600 (-73%).

My Opinion:

There seems to be multiple glaring problems in its current business.

  1. Lack Of Focus: PayTM has been on a spree to start new verticals without any plan of monetization or profitability.

a. PayTM: PayTM itself has 2 core segments, mediating transactions and providing Value Added Services. They use Payment Options/UPI to attract users to come to their platform and then prompt them to do other tasks such as Bus, Train Bookings etc through the app where they earn money. The problem in this space is that it’s very crowded (PhonePe,GPay,ixigo,MakeMyTrip) and hence margins are paper thin.

b. PayTM Mall: An e-commerce store which was a 1:1 copy of flipkart/myntra. The overall execution of this product is horrible. No checks for scams, poor logistics handling etc seem ripe in this space. This was made as a spinoff of the Original Company which recently lost its Unicorn status and seems to on the verge of shutting down.

c. PayTM Bank: Sometime ago PayTM got approval to provide some financial services but seems to already botched this too as RBI is investigating it for Leaking data to chinese firms.

In Conclusion, none of the segments seems to provide confidence to me that this will become a fundamentally strong business.

  1. Company Structure: PPBL which in my opinion is the best of all segments is not completely owned by PayTM. Vijay Shekhar Sharma holds 51 per cent in the entity with One97 Communications Limited holding 39 per cent and the remaining 10 per cent of share is held by a joint venture between Vijay Shekhar Sharma and One97 Communications. Since VSS runs both the companies, this makes us retailers vulnerable to management shenanigans.

  2. Management: VSS doesn’t inspire a lot of confidence to me. You can view his interviews here and form your own opinion. Vijay Shekhar Sharma & Madhur Deora React To Macquarie Report On Paytm | CNBC TV18 - YouTube. Another major red flag is that management is conflating talking about PPBL and PayTM. In Interviews, the management says that “PayTM is doing well on lending, it has done 2.8 million loans in september”. Except, the loans are done by PPBL and not PayTM. PayTM may have facilitated the loans but in future PPBL has no obligation to keep using/supporting PayTM.

  3. Shareholders: I feel a lot of foreign shareholders compare PayTM to VISA/Mastercard which is a skewed view as India has UPI which kills all these players. I could be wrong on this one.

The only Positive thing I have about this company is that they can adopt BharatPe’s Loan Financing Model really fast which seems to have a lot of room of growth.

Sources: Fundamental Analysis of Paytm | Paytm IPO Review
The Indian Smartphone Revolution: Paytm's "Coming of Age" IPO - YouTube

Disc: Not Invested


Can some one help me out about Paytm Mall (ecommerce arm), as per my knowledge it was part of paytm. What is the current status of it.

Great article over Paytm and whole fintech space.

Better to wait till there is a turn around story or outlook of profitability.

ab228ae7-d7d2-4cf3-9b4c-2b3d681f51d4.pdf (1.3 MB)

earnings transcript

Good thought model


Indeed! It could be very beneficial.


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Now days in every shop we are seeing a Paytm all in one pos for receiving payments.they have invested massively into it . Weather it will pay them off or not is to be seen but their execution quality is top notch.
Deploying so many devices in all the cloth stores and footwear shops hotels across nook and corner of India is not an easy task. My respect to the Paytm management for this.
Disclosure: not invested.


SoftBank plans to offload 29 million shares in Paytm after the post IPO lock-in period ended yesterday.

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Major investors of Paytm pre-IPO are all in losses (Current Price: ₹547.60). As @parthgoyal mentioned, the lock-in period ended, and they’re free to sell off.

Investors  Stake   Acquisition Cost
---------  ------  ----------------
SoftBank   17.45%  ₹1820
Ant        24.88%  ₹1833
Berkshire  02.41%  ₹1280
Alibaba    06.20%  ₹583

source: Business Standard


I think the stock is undervalued by even by the most conservative estimates. I have shared a sum of parts approach to value the different businesses it is in, that you will find below. Key takeaways [Basis Q2 '23]:

1. Consumer and Cloud Business
a) INR 377 Cr revenue across ticketing, gift vouchers, and advertising.
b) Revenue multiple between 3 and 6 indicated valuation of INR 5400 Cr for this segment [EMT is at 11000 Cr :), and my guess is there business in just ‘ticketing’ is similar to Paytm]
c) The revenue mix will have limited impact (max 20%) on segment valuation, because the highest multiple,6, has been pegged at 20% of this segment

2. Payment Services
a) Despite the much faster growth, revenue multiple of 5, which is on par with PayPal

3. Lending business, without risk (barring Postpaid)!
a) Bajaj Finance is at a revenue multiple of 12.
b) Even at a multiple of 5, it is a screaming buy

Basis this, I intent to start adding positions in Paytm. Even by the most conservative estimate, I think they are undervalued by 15%.

What am I missing?


  1. Ex-Paytm, quit in 2019 (after 3.5 years).
  2. Looking to invest aggressively below 500 levels


How can you even compare the company’ lending business to Bajaj Finance? Is Bajaj Finance loss making?

How can you even compare the company’ payment services to PayPal? Is PayPal loss making?

How can you even compare the company’ advertising to Meta? Is Meta loss making?

Paytm could be even be worth “ZERO” unless Jio Finance or someone similar buys out the company to use what they have built to build something bigger.


I look at valuation as a function of the earning potential of a company as opposed to current profits/losses. One can argue that the estimates are unfair for Paytm, because it is growing at 400% as opposed to 40% (of Bajaj Finance). As investors, it is for us to think probabilistically (any company can absolutely go to 0) and make peace with the risk we are taking up :slight_smile:


Pls read this detailed blogpost on pay tm valuation and how Aswath Damodaran arrived at such valuation. Also macquire views on paytm.
This blog came during paytm IPO but I still think it is relevant and gives great insights on how to value new age companies.


Growing revenues is easy because lending money is easy. Recovering it is hard.

Paytm has shown no path to profitability. It does not matter how fast revenues grow. If you are not profitable the share is worth nothing

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Underwriting risk is in Lender’s scope, in which case Lender’s will do their due diligence. Returns without (with limited) risk is an amazing model!


Damodaran makes this exact mistake. Payment Aggregator market is getting crowded by the day. Every Tom, Dick and Harry wants to launch their own UPI Pay. PayTM’s core Business has no moat.