The parent company of leading Indian fintech platform Paytm is currently one of the top-performing fintech stocks on the planet. During the last quarter, Paytm shares are up 45%, with its 89% rise in Q1 2022 revenues helping the share price to surge a further 7% on the Bombay Stock Exchange (BSE).
Paytm bravely launched its IPO in 2021 despite all the signs suggesting that the global fintech sector was treading water at best – and, at worst, drowning. It's $2.5bn IPO made history as India’s biggest ever fintech IPO and the second biggest IPO in the fintech sector of 2021.
Paytm seemingly outmaneuvering its “global peers”
According to brokers Goldman Sachs, its revenue growth is expected to rise at a compound annual growth rate (CAGR) of 37%, which is “higher than global peers at 28%”. It’s little surprise when you consider the growing number of use cases for the Paytm platform. According to Lucky Dice, it’s comfortably the most popular payment method for iGaming in India. It indicates that the best online casino in India would have to include Paytm as an acceptable deposit and withdrawal method.
Similarly, Paytm is increasingly used for other everyday payments, including bookings for public transport, utility bills, and even e-commerce transactions. As a secure payment gateway, Paytm is India’s number-one e-wallet, ensuring bank accounts are one step removed from most basic transactions. All of this help maintain the security and integrity of the traditional banking system. However, its recent downtime earlier this month demonstrated that even e-wallets are susceptible to technical issues.
Paytm broadens its reach into small business finance with the Piramal Finance partnership
Paytm isn’t just on the side of Indian consumers. It’s also demonstrated that it’s on the side of India’s small business community too. It has recently partnered with Piramal Finance to launch a new merchant loan business, giving small businesses access to credit lines worth up to Rs 10 lakh. Repayment terms can be set from six months to 24 months respectively. Small business finance will make a huge difference to ambitious small firms in modest towns and villages across India, who would ordinarily struggle to access conventional business loans.
For some time, Paytm has been dabbling in the loan distribution sector. For the quarter ending 30th June, Paytm raked in Rs 271 crore in revenue from all its financial services, with the majority derived from loans and its wealth and equity trading platform via Paytm Money.
Paytm disbursed upwards of 8.5 million loans for the last quarter at a value of Rs 5,554 crore. Jairam Sridharan, managing director of Piramal Capital, said the partnership would help both firms reach out to the “merchants in the Bharat markets”. Many of whom are “loyal Paytm customers.” Piramal Finance has a network of more than 300 branches in tier-2 and tier-3 towns across India, which Paytm hopes to leverage in the coming months.
Loan distribution is one of the main reasons why the country’s primary digital payments solution anticipates finally achieving profitability by September 2023. A widening of its Q1 2022 operating costs by almost 70% failed to dampen the enthusiasm among investors and brokerages surrounding the company.
