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Paytm reduces losses by 40% in 2020-21. Is it on the right track towards profitability?

Paytm on 04.09.2020 has announced that it has clocked the revenue of Rs. 3629 Crores in the year FY19-20, up by 20% as compared to last year. And have claimed to reduce the losses by 40%. Last year it has incurred the losses of ~4100 Crores. In FY19-20, the number of transactions has increased by 50% as compared to last year. The company is expected to come in profit by 2022.
In FY19-20, Paytm has started a new stream of businesses under the financial arm i.e. lending, wealth management, & insurance. Paytm offering of Android-based POS devices to SME and Kirana shops through its payment bank arm is gaining popularity.

Main Businesses of Paytm

1. Paytm Money
For managing the business under Paytm money, it has hired industry veteran Varun Shridhar to manage the business.

Paytm Money Appoints Varun Sridhar as New CEO

Under Paytm money, it has started offering stock broking services as a discount broker for giving tough competition to discount brokers such as Zerodha, Uptox, Angel Broking etc.

Paytm joins the bandwagon to offer broking services

2. Paytm Insurance
For Insurance services, it has recently acquired QE Raheja group and probably by next year will get IRDA approval.

Paytm Money Appoints Varun Sridhar as New CEO

3. Paytm Payment Bank
Through this license, it gives all the services related to digital payment in India. Paytm Payment bank is the only payment bank in India which is profitable and has shown continuous profitability in the last 2 years.

Paytm Payment bank has shown profitability in last 2 years

UnlistedZone view
In the last 1 year, we have seen very little or no advertisement by Paytm thereby saving a lot of money which is boosting the bottom line. Moreover, in the last 3-4 months Paytm has hired 10-20 industry veterans to run its different business verticals. With pressure from investors such as Softbank to perform or perish, Paytm in the last one year has shown good performance. At the current market price of Rs. 11000 in the unlisted market, it is available at a valuation almost 30% down by the last funding that has happened in Nov-19.

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