This is the source of the news by ET
Paytm’s clarification about the same
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With 150 Rs/share in cash, seems like a deep value now assuming company gets out of this muddle…
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Don’t forget Paytm is cash burning start up… so cash in hand can get wiped up eaisly.
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The only thing that’s makes me interested in the company is sheer negativity around it.
When everyone else is bearish, there’s always an opportunity to look for.
Yes I agree that the valuation might be on higher side but remember a few days back when it rallied from 500 to 900 everyone was talking about 2000 again, that’s how it is.
Recently started adding a very small qty and will add more (as I think share will tank more from here)
PPBL licence will affect that company but the problem is solvable in the long run, there was slight irregularities in the way they used to operate but there’s no sign of the fraud or mismanagement on overall company level.
Positives I am seeing:
Huge customer base
Revenue rich segments like soundbox merchant services
Trading in the range of .15x -.25x compared with ipo price.
Restructuring in loan business.
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Just playing devils advocate and giving my views…
Regulatory concerns reflected by RBI governor are serious and comments from that level of authority are unprecedented .
Better to wait for things to be more clear and bottom fishing can be many a times dangerous.
Money invested small or big is our hard earned and Greed should always be challenged by fear scenarios so as a judicios call is takem
Disclosure:
Neither invested nor looking for any investment as I have other options
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Now ED has also come into picture. Won’t other banks hesitate to tie up with Paytm until ED gives them a clean chit??
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Cash burn at Paytm has largely been arrested and the EBITDA doesn’t correctly justify the esop cost. Attaching both below to help make my case.
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RBI has released FAQ and have extended deadline to 15th March for all things related (inbound trxn) Paytm Payment bank but for me below is the most important question.
https://rbidocs.rbi.org.in/rdocs/content/pdfs/PaytmPaymentsBankLtdFAQ16022024.pdf
https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR1895ACTIONAGAINSTPAYTMPAYMENTSBANK0F4E6B2C2EFB4907A705CB81013AA24D.PDF
Disc. Have holding it in core portfolio.
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What all of these mean now?
RBI cannot make this clearer anymore. Paytm Payments Bank is the only concern. RBI has nothing to say about Paytm super app. This indirectly implies that partners need not hesitate to do business with Paytm. As the result, Axis Bank partnered with Paytm for the nodal account.
There is one thing still not clear. RBI FAQ mentions that merchants with Paytm Payments Bank needs to change their QR code, etc setup. And no change required from merchants with other bank accounts. However, Paytm now says, having partnered with Axis Bank to shift nodal account, that QR, soundbox, etc will continue to operate for “all” their merchant partners.
It would help to know why Paytm feels that even merchants with Paytm Payments Bank account won’t need to change any of their setup (except changing the bank account from PPBL). Is shifting nodal account sufficient for this, unlike what RBI suggests to those merchants in the FAQ?
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I have seen, Soundbox are unaffected mostly. People are not switching as people thought they would abandone PayTM. People trust payTM. Some have switched QR codes. But soundboxes are still of payTM. We will need to see more data in coming months. Vendors are willing to wait and switch the linked account to other bank, but soundboxes are of PayTM. And most people have got the word that it’s not about PayTM but about PPBL. So, PayTM has truly build behaviours, especially at merchants or small vendor level. But if the things don’t come on track sooner, they might definitely switch.
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Please look at the below screenshot
OCL is reaching out to all their merchants and asking them to change their settlement bank account from PPBL to something else. Please note that KYC for these merchants in order to accept payments was done by OCL and not the Paytm Payments Bank. So all these merchants still continue to be eligible to accept digital payments through a QR code or soundbox.
Once merchants change their settlement bank account (this can be done easily without a physical visit), merchant’s life will carry on as is.
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That’s good to know @aadhar.aggarwal. Thanks. If it is as simple as providing a different bank account, Paytm need not lose most of the merchants.
Shouldn’t they be sending these messages only to merchants who have Paytm Payments Bank as settlement account? Sending to everyone is unnecessary, and may cause confusion, I think.
I continue to wonder how well the merchants understand the situation, as there seems to be a lot of misinformation, some of them motivated.
This is my recent experience at a barber shop. He has Paytm QR code (and no other). I asked him if it is okay to scan this QR code as recently there is some bad news about paytm. He confidently told me that it is only issue with the paytm bank, and there are no problems with payments; then he let me scan paytm QR to pay.
Yes, this cannot be sufficient evidence to assume that the majority of merchants are similarly well-informed. Please do share your experiences in this regard, as there is constant news about competitors taking advantage of the situation. It is still not clear how much disruption paytm’s business is facing.
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I have one question on merchant side UPI.
Let’s say I am merchant on Paytm and uses PayTM for business were I will be tracking all things. Does this have VPA like @paytm? and on soundbox if I change my bank account, as it will have new VPA then how it will affect soundbox QR?
I believe Soundbox QR code can remain same even though you change your account as paytm app will make that linkage but wanted to confirm.
Thanks!
Many reports say PAYTM has $1bn cash reserves… thats INR 8300 crore. example this source: Jefferies Stops Coverage on Paytm Until Regulatory Issues Ease - BNN Bloomberg.
is there anyway to confirm this figure? what are contingent liabilities ? like any FLDG default share etc?
If this INR 8300 Crore cash reserves is true, then they can use even Rs 300 crore to do a mass media + on ground sales outreach campaign creating awareness to lacs of merchants that only the payments bank will change, everything else works same.
The rest of issues, can be shown a message on the app itself, like fastag users.
Paytm’s balance sheet shows these. I usually look at Investments and Cash Equivalents.
Screener shows about ₹60 crores as Contingent Liabilities.
They do.
They do this too since the beginning of this episode.
I don’t know what is the meaning of FLDG default share. Someone who knows about this can help.
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Thanks @rpattabi
FLDG means “First Loss Default Guarantee”, when a fintech compensates lenders for loan default.
See this: RBI gives green signal to first loss default guarantee (FLDG) framework; here's how will fintech, banks, NBFCs benefit | Mint
just checked PAYTM press release: https://paytm.com/document/ir/financial-results/fy2021-22/Paytm_Operating_Performance_Update_Dec21.pdf
No FLDG has been given.
so if no FLDG and contingent liabilities just 60 cr… then they have $1 billion cash. Thats a LOT of cash
so imagine Paytm from this perspective: its a NEW startup with following -
- App with more than 100 million monthly active users.
- Very high Top of mind brand recall in all urban cities.
- Superb payment gateway and UPI QR code technology. 8million + soundbox merchant users
- Aprox 7% stake in PayPay - No. 1 payment company in Japan (co promoter SoftBank and Yahoo Japan).
- INR 8300 CASH warchest.
THIS startup is currently trading at just 2.74x of its cash reserves (mcap of ₹ 22,773 Cr. or $2.74 Bn).
Does Paytm merit a small % of your portfolio?
I think PAYTM now needs to use its cash wisely, maybe even buy some other cos.
Disc: invested in small qty for tracking.
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