Mr. Sharma, an engineering graduate, founded Paytm in 2010
New Delhi:
Paytm founder and CEO Vijay Shekhar Sharma issued a challenge note Thursday night after the digital payments company’s stake crashed up to 28% on market launch, which has investors and analysts concerned about its expansive valuation — around $20 billion.
Mr. Sharma, who cried in joy during the opening ceremony, told NDTV “no investors come in for a day”.
“One day’s loss doesn’t represent the whole picture. We have to do a good job explaining the Paytm business model … it’s only day one. We’re growing (in terms of) revenue, we are growing (in terms of) profitability. We are expanding and we will continue to expand,” Mr. Sharma told NDTV.
“It’s a Test match series, it won’t end if a quote or two is lost.”
“The market deserves a good quality company … (that) generates good revenue,” he said, stressing the need to allow investors time to understand a variety of offerings. services that Paytm offers, including insurance and gold sales, movies and flight tickets, and bank deposits and money transfers.
“There is no doubt that a payments company can expand into insurance and investments,” Mr. Sharma said. We needed to explain our company’s business model and implement it.
Paytm – which reported a loss of $3.82 billion for the quarter ended June (Rs 2.84 billion y/y) – had an impressive debut this morning, with shares opening opened on the NSE at Rs 1,950 (Rs 1,955 on BSE) – against an issue price of Rs 2,150 – before settling at Rs 1,560.
Paytm debuts on Indian stock market today
Analysts told NDTV that The company’s valuation may have gone after a poor first session.
“…it (Paytm’s valuation) is saying I’m 20% of HDFC Bank, 40% of Kotak Bank and I’m 65% of Axis Bank. This is pure financial madness,” said Anurag. Singh, managing partner at Ansid Capital, said.
Analysts at Macquarie Research told clients that Paytm’s business model lacked “focus and direction”, and that the company was a “money-eater”.
Mr. Sharma reacted furiously, telling NDTV that the focus of his company at the moment is on investing in people. He was also earlier defends the view that Indian tech startups are overvalued.
“The investment we’re making (now) is in engineering and sales people. We could turn to profits if we didn’t invest in customer acquisition and new technology. That’s it. the choice we’re making …” he said.
“Overall, we’re investing in the future. We’re going to continue to expand. We’ve had to issue a mandatory disclaimer…. revenue is growing phenomenally. We are. Do you want to make an immediate profit or build technology for the future?” he asks.
Mr. Sharma also suggested Paytm would benefit from being an Indian company and the country would develop into “a sustainable place for job-creating tech companies”.
Even though on opening day, Paytm still hit a valuation in excess of Rs 1 crore.
And analysts have had some positive feedback, saying the company — about a third of which is owned by Chinese tycoon Jack Ma’s Ant Group, Japan’s SoftBank and Berkshire Hathaway’s Berkshire Hathaway. Warren Buffett – can be profitable without investing “too much” to promote growth opportunities.
Launched in 2010, Paytm grew rapidly after ride-hailing company Uber listed it as a payment option, and its use increased further in 2016, following an overnight government ban. for high value coins.
Paytm’s success has turned Sharma, the son of a school teacher, into a billionaire with a net worth of $2.4 billion, according to Forbes. Last week’s IPO also created hundreds of new millionaires.
With input from Bloomberg, Reuters
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