India’s Paytm targets profitability by Sept 2023 By Reuters

BENGALURU (Reuters) – Indian digital payments firm Paytm said on Wednesday it is aiming to be operationally profitable by September next year, seeking to allay doubts about its business model that has clouded the stock.

Backed by China’s Ant Group and Japan’s SoftBank Group Corp (9984.T), Paytm raised $ 2.5 billion in India’s largest initial public offering (IPO) last November, but made a dismal debut on widespread concerns over its high valuation.

Its shares, which have lost more than 70% from its IPO price of 2,150 rupees, rose as much as 4.3% on Wednesday to a near three-week high of 635.4 rupees following the news.

“We are encouraged by our business momentum, scale of monetization and operating leverage,” founder Vijay Shekhar Sharma said in a letter to shareholders.

“We expect this to continue, and I believe we should be operating earnings before interest, taxes, depreciation, and amortization (EBITDA) breakeven in the next six quarters.”

Sharma said his stock grants would vest only when the firm’s market capitalization crossed the IPO level on a sustained basis.

Paytm shares also suffered after the central bank last month barred its payments bank from adding customers, and ordered a comprehensive audit of its IT systems, citing “material” supervisory concerns.

The company denied last month a Bloomberg News report that said the Reserve Bank of India had found Paytm Payments Bank’s servers to be sharing information with China-based entities that indirectly own a stake in the firm.

On Wednesday, the company also said the number of monthly transacting users of its app was at its highest during the quarter with 41% annual growth to 70.9 million.

It disbursed 6.5 million loans during the quarter, for a total value of 35.53 billion rupees ($ 470 million).

($ 1 = 75,5620 Indian rupees)