Paytm: In the digital age, there is a growing trend of using smartphones and laptops to access the internet. The transformational change has helped many companies implement their digital products to tap the market in a wider way. The Internet has the proven ability to reach every corner of the world. The most significant benefit derived from this change was financial. It is also called Fintech.

This opportunity has added competitiveness in the industry. This company has been in regulatory overview and was punished severely. In this article, we delve into Paytm (One97 Communication), a major player in the fintech industry, and its various operation.

Company Business and Overview 

Paytm led the digital revolution in India. Vijay Shekhar Sharma created Paytm in 2010. Paytm were running a digital ecosystem for consumers and merchants. It provides payment, commerce, cloud, and financial services to 333 million consumers and over 26 million merchants. The majority of the group’s revenue comes from customers based in India. Today, Paytm enables over 20 million merchants and companies to accept payments digitally.

The Paytm App may be used to pay bills, recharge, send money to friends and family, and book movie and vacation tickets. With innovations in financial services and goods in the works, this is just one step towards our goal of bringing 500 million unserved and underserved Indians into the mainstream economy. 

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Revolutionise “Make in India”

The growing dominance of manufacturing powerhouses such as China has indirectly threatened the weaknesses in the global manufacturing system. Similarly, India and other countries are beginning to recognise the importance of supply chain management and raw material availability, which can pose a significant threat to the economy.

As one of the most populous countries with a strong service industry, each government has attempted to attract more foreign direct investment over the years. Recently, the government launched Production Linked Incentive schemes for manufacturing companies, allowing them to capitalise on the growing marketplace. 

One of these is the concept of a soundbox, which allows vendors or sellers to listen to any payments received from sales. It helps them when there are more customers at the store and tracking those gets tough. Recently, Vijay Shekhar Sharma was vocal about PLI for manufacturing soundbox, which can help reduce costs and create value inside the country.

Competition In Fintech Space

While some of India’s top fintech unicorns, such as Razorpay, PhonePe, Google Pay, and Pine Labs, are leading the way, most companies offer diverse financial services. Competition is only increasing as other companies diversify into a wide range of financial products, and a better user interface and experience can set you apart from the competition.

Regulatory Issues and Reputational Risk

On February 16th, 2024, the Reserve Bank of India imposed restrictions on Paytm Payments Bank operations, a subsidiary of One97 Communications. This had an impact on revenues and profitability. The trend increase in non-compliance and raised previous warnings from regulators was overlooked. This had a huge impact on its brand image as well. The company that was once the leader in the digital fintech industry has lost market share to competitors. Later, Paytm Payments Bank was suspended and closed. 

The transition towards AI and firing employees

Paytm has recently fired employees, citing the use of artificial intelligence in its operations. In December, around 1,000 employees were fired. The adoption of AI would cut costs in the long run, especially with repetitive tasks and improving efficiency. In June, there was another round of employee firings. A Paytm spokesperson stated that the company is currently undergoing organisational restructuring.  

Partnering with Samsung and its prospects

Recently, the company partnered with Samsung to offer travel and entertainment services through its wallet in India. This allows Samsung wallet users to use Paytm’s bus, movie, flight, and event booking services. Galaxy smartphone users can use the Paytm app to book flights and other services, and their tickets can be added directly to Samsung Wallet. Paytm withdrew the insurance application and plans to continue distributing insurance products through its subsidiary. 

Industry Overview Of Paytm

Fintechs have reached a new stage of wealth creation where the emphasis is on profitable, sustainable growth, following decades of hypergrowth. Fintech players are startups and expanding companies that primarily use technology to handle the necessary functions carried out by financial services. This affects how people move, pay, save, borrow, invest, and protect their financial resources. 

The Global Fintech Market is expected to be worth USD 312.92 billion in 2024 and USD 608.35 billion in 2029, growing at a CAGR of more than 14% during the forecast period (2024-2029). 

India’s Fintech market is one of the world’s fastest expanding. The Indian FinTech industry is valued at $50 billion in 2021 and is expected to reach ~$150 billion by 2025. The industry’s Total Addressable Market is expected to reach $1.3 trillion by 2025, while Assets Under Management and Revenue are projected to be $1 trillion and $200 billion, respectively, by 2030. 

Digital loan sector in India was valued at $270 billion in 2022 and is predicted to reach $350 billion by 2023. The payments environment in India is estimated to exceed $100 trillion in transaction volume and $50 billion in income by 2030.

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Financial Overview And Key Performance Indicators

Paytm’s financial performance suffered in the fourth quarter of FY24 as a result of regulatory restrictions, and the company halted its payment and lending services. The revenue from operations for the most recent quarter was Rs. 2,267 crore, compared to Rs. 2,334 crore in Q4FY23. Based on the year-on-year performance in FY24, Paytm made Rs. 9,978 crores compared to 7,990 crores, an increase of 25%. 

In FY24, Paytm earned approximately 21.72% from payment services to consumers, 39.68% from payment services to merchants, 20.08% from financial services and others, 17.41% from marketing services, and 1.08% from other operating services. Employee costs, excluding ESOPs, have a significant impact on its financials. It takes around 31.30% of their revenue. It has grown 34% YoY, greater than revenue growth in FY24. 

KPIs are based on Q4FY23 and Q4FY24. Gross Merchandise Value in Q4FY24 was around 4.69 lakh crore compared to 3.62 lakh crore in Q4FY23, representing a 30% YoY increase. This resembles an understanding of the scale and growth the company is witnessing through various methods like mobile recharges, bill payments, movie tickets, shopping, etc. 

Merchant transactions in Q4FY24 totalled 962 crore, up from 685 crore in Q4FY23. An increase of 40% YoY. This KPI represents the Paytm platform used by businesses and customers pay to merchants. Its growth showcases the adoption of the platform and the frequency with which customers pay their merchants.

Payment Devices by the end of Q4FY24 were around 107 lakh, up from 68 lakh in Q4FY23. This is an increase of 58% year over year. The metric allows us to understand the breadth of the Paytm network and its penetration into various markets and sectors, which is an important part of the growth. This establishment might have an effect due to regulatory restrictions.  

Particulars/ Financial Year2019-202020-212021-222022-232023-24
Revenue (Cr.)₹3,281₹2,802₹4,974₹7,990₹9,978
Net Profit (Cr.)-₹2,942-₹1,701-₹2,351-₹1,764-₹1,158

Key Metrics Of Paytm

Here are some of the key metrics of One97 Communications (Paytm)

CMP₹427.00Market Cap (Cr.)₹27,023
RoE (TTM) -10.63%Book Value per share₹209.54
Revenue Growth (3 Years CAGR)34.54%Net Profit Margin (%)-22.23%
Public Holdings (%)32.74%FII Holdings (%)60.40%
Debt to Equity Ratio (TTM)0.01Price to Book Value (TTM)2.03
Current Ratio (TTM)3.49EV to Sales (TTM)2.2

Future Plans Of Paytm

  • Paytm will continue to invest in sales teams and marketing to drive growth in their merchant and consumer base, as the payments business is their core focus area.
  • They plan to cross-sell financial services like lending, insurance, and wealth management products through a distribution model, expanding partnerships with lenders/insurers.
  • For lending, the focus will shift more toward a distribution-only model for personal loans and merchant loans where Paytm does not do collections. Paytm plan to pilot secured lending products like micro LAP loans.
  • Insurance broking will focus on product-led embedded insurance and DIY insurance products. For wealth management, the emphasis will be on driving SIP investments in mutual funds.
  • Paytm intends to create a leaner organisational structure and achieve annualised cost savings of Rs 400-500 crore, primarily by rationalising employee costs.
  • Paytm intend to reduce non-core assets and businesses to improve focusing profitability.
  • The board is currently discussing how to best utilise the significant excess cash reserves, including potential cash returns to shareholders.


As we near the end of the article, we have looked at Paytm’s journey and path to revival. From being at the forefront of India’s fintech boom to encountering regulatory issues with the RBI, its business was derailed. Its revenue has increased as a result of changing consumer spending habits. The profitability has been the issue for long and higher employee costs. The ESOP has dragged down and postponed its profitability.

Organisational restructuring can assist the company in putting the worst behind it and focusing on its distribution strengths. This has the potential to lead to the company’s next phase of growth. The restrictions imposed by the RBI have taught big companies that warnings cannot be taken lightly. What do you think about the company’s prospects? Let us know your views in the comments section below.

Written by Santhosh  

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