One97 Communications, which runs the digital payments platform,
Its stock saw a drop of over 26% From its issue price of Rs 2,150 in what turned out to be a disappointing start for the digital payments major in the Indian stock markets. Vijay Shekhar Sharma, Founder and CEO One97 CommunicationsSaid that the listing, which was much-hyped for being the largest public offering in the country, should be viewed only on its “first day” in the markets, and not as a reflection of the company’s long-term performance.

Paytm’s IPO comes on the back of successful listings by other digital startups such as Zomato, Nykaa, Policybazaar, which received higher valuations in the public markets than their private ones. Sharma said fintech platforms like Paytm are not as well understood as other consumer internet firms that have gone public. “These models are easy to understand… if I sell a wallet or a phone or I can pick up food from a restaurant… you know what. business model Compared to [payments]… how do you get customers? How do you make money and what is cross-selling? These are questions asked by public market investors,” Sharma told ET in an interview after the company’s listing on Dalal Street on Thursday.

He said stock markets are “opinion-polls” in the short term and “weight machines” in the long term. “The stock market cannot impact the company’s objective,” he said, adding that Paytm still opted to go public because its business model requires building a huge ecosystem around it in the long term.

Thursday after business hours,
Paytm had a market cap of a little over $13 billion, down from its previous private market valuation of $16 billion in November 2019,
When it raised funds from US asset manager Trove Price and others.

Sharma, who was in high spirits despite a disappointing first day of business, said it was ‘incredibly difficult’ for the first time in the industry to build a large firm and take it public. He cited the example of Flipkart founders Sachin Bansal and Binny Bansal, who said they set the bar for private funding in the Indian startup sector when they raised $1 billion on the back of Alibaba’s hugely successful IPO in 2014. The massive fundraising led to intense bargaining for a year when India saw its first tech and startup boom.

Sharma said it was incredibly difficult to be at the forefront of doing things. Sharma said a big IPO, public market debut and subsequent investigations by companies (like Paytm) would enable more companies to follow the same path. “What is proven today is that young, fledgling technology companies that don’t have the pedigree of big names can still build incredibly large companies.”

Despite a disappointing start in Paytm shares, Sharma said the “beautiful” process that Paytm has gone through proves that India has the potential to absorb large IPOs. “There is market depth and there is a huge investor appetite for incredible companies that are serving Indian consumers,” he said. Paytm raised Rs 8,235 crore from anchor investors (large institutional investors) under its Rs 18,300 crore IPO.

China’s Ant Group and Alibaba hold around 30 per cent stake in Paytm after the IPO. A report by global brokerage firm Macquarie said on Thursday that it could remain a matter of concern for the company in securing regulatory approvals. Sharma said this was never a problem for the company and it is currently not seeking any new licenses from regulators for its business plans. “The fact that we are listed also tells you who (which investor) has what rights (in the company),” he said.

Although analysts say higher pricing of the IPO could have driven the stock price down when it hit the market, concerns about its growth in many of its businesses remain. While it has been a clear leader in the mobile wallet space, the company is seeing increasing competition in areas such as wealth management, payment gateways, insurance and other verticals. However, Sharma said they were the market leaders in most payments-based businesses. “We fundamentally believe that payments-based financial services is an incredible opportunity in India. This is what we are committed to and will remain committed to in the near future.”

The company is betting big on lending and insurance to build up its financial services game. Sharma said the objective is to leverage Paytm’s existing 30 crore user base by cross-selling these financial products.

When asked about the intense competition in online finance, Sharma said, “I saw competition from Google, Facebook and maybe even Walmart, but none of them were able to move us from where they did all that. what they could do.” Service area.

He added that Paytm has seen more competition than any other firm in the ecosystem. Google’s payments arm Google Pay and Walmart-owned PhonePe is increasing its market share on the Unified Payments Interface (UPI) platform and has a healthy lead over Paytm. Facebook-owned WhatsApp has also launched payment services using UPI.

While Paytm’s operating revenue fell 14% to Rs 2,802 crore in FY11, with a bottom loss of Rs 1,701 crore, its red herring prospectus (RHP) showed that its operating revenue during the June quarter of FY20 declined 61%. increased to Rs.890. Ten million. During the same period, its losses totaled Rs 382 crore as compared to Rs 284 crore in the same period a year ago.

Paytm’s revenue is being driven by payments and financial services, which now contribute about 77% of its total revenue, according to the filing. Sharma said the company will continue to focus on the broader financial services business rather than just one or two specific payments businesses.