Paytm’s October Metrics Might Give Legs to Bounce Back From Busted IPO

Paytm’s journey back from busted initial public offering (IPO) status may be more a marathon than sprint.

But, as they say, sometimes slow and steady wins the race.

In the roughly two weeks since going public, shares in Paytm — actually, its parent company, One97 Communications — have had what might be termed a rough go of it.

At a recent 1,753 INR, the stock trades well below the initial offer price of 2,150 INR.

But the most recent quote may offer a bit of solace — just bit — for the largest IPO in India (to date), which raised the equivalent of $2.4 billion USD.

Because that 1,753 INR represents a gain of 12% in intraday trading. It’s never a good idea to try to call tops or bottoms in a stock but it is a good thing to try to gauge whether sentiment is turning.

As noted in this space last week, some analysts have been negative on the name, citing the need for the digital payments giant to branch out into adjacent markets such as lending in order to make money.

Read more: Paytm’s Busted IPO Shows Investors’ Fears Over Long-Term Prospects

Yet, we note, there are indications that many of the trends that have underpinned the company’s rise to market dominance (it has 40% share in in consumer transactions to merchants) remain intact.

Triple-Digit GMV Growth

The company said earlier this week, through a filing with the National Stock Exchange of India, that gross merchandise value (GMV) for the month of October surged 131% to 832 billion INR (around $11.2 billion). At least some of that growth, we note, comes in tandem with festive selling seasons, and accelerates off the September GMV growth of 107%.

The GMV growth also comes with continued traction in monthly transacting users — a trend that offers encouraging signs for future momentum. In October, growth in that metric actually accelerated, to 63%.

The company further states that its monthly transacting users (MTU) have consistently grown in FY21 and in the first two quarters of FY22, and the trajectory has continued in October 2021 with 63 million MTUs, representing growth of 35% year over year versus the 47 million MTUs in October 2020. The GMV per transacting user also was on the upswing, to the equivalent of $177 USD, where last year in October that tally had been $104.

“We continued to witness strong adoption of our devices business amongst merchants. As disclosed in the prospectus, the total number of devices deployed across our merchant base has increased from 0.9 million as on June 30, 2021 to approximately 1.3 million as on September 30, 2021 to approximately 1.4 million as on October 31, 2021,” said the company in its fling — which indicates that the installed bases of merchants and users is headed up and to the right (the directions that any company wants to see).

And in reference to the lending business that is being questioned by analysts, Paytm stated that in October, its financial institution partners disbursed a total of 1.3 million loans in October 2021 aggregating to a total disbursal of roughly $84 million — equating to a 472% increase in numbers of loans disbursed and a 418% increase in value of loans disbursed as measured year over year.

As we noted above: The recovery from investors’ initial disfavor will be a marathon, not a sprint — and it may not necessarily be a straight line … though the numbers just released might point in the right direction.