Paytm sees strong growth but fears over effects of new regulations cause stock to drop

By

Isabelle Crossley

Published
Jan 11, 2022

Digital payments and e-commerce business Paytm’s parent entity One97 Communications has reported a growth in its loan disbursals and gross merchandise value in the quarter ended December, 2021.

Paytm’s GMV more than doubled to reach Rs 2.5 lakh crore ($37.6 billion) in the recent financial quarter, which ended in December, 2021. This figure was up from Rs 1.1 lakh crore in the same time period a year ago, TNN reported. The business’ loan disbursals also rose four times year-on-year in the recent quarter. 
 
“Our monthly transacting users (MTUs) showed consistent growth in FY21 and in the first two quarters of FY22,” wrote Paytm in an exchange filing, TNN reported. “The trajectory has continued in the third quarter of FY22 with 64.4 million average MTUs- growth of 37% year-on-year over the 47.1 million average MTUs in Q3FY21.”

The business announced the financial results just after its shares had hit a new low price of Rs 1,151 per share then closed trading at Rs 1,158 per share at the end of the day on January 10. This represents a significant drop for the business as its market capitalisation is now Rs 75,064 crore compared to close to Rs 1.4 lakh crore at its initial public offering valuation. 
 
One reason for Paytm’s recent share value decline is that the Reserve Bank of India has proposed digital payments regulations which could cap e-wallet charges. As much of Paytm’s business comes from its payments business, any reduction in revenue from payments’ charges will greatly affect Paytm’s total revenue. This has made some investors more wary of the business’ prospects for short-term growth.