After a miserable debut on stock exchanges, will October 2021 business update propel the stock of Paytm?

The growth momentum in gross merchandise value (GMV) continued in October 2021, driven by festive season spending as well as an increase in the number of merchants & consumers

The debut of Paytm on the stock exchanges has become the new talk of the town, where everyone was seen creating memes as the stock fell as much as 27 per cent on the initial day itself. However, the company has come out with its operational performance up to October 2021, which would be interesting to check whether this would propel the stock price or not?   

Here are some interesting insights or highlights: 

The company continues its strong operating performance in the month of October 2021, with increasing numbers of consumers & merchants transacting on their ecosystem, increasing frequency of transactions as well as the adoption of its different products & services.  

The growth momentum in gross merchandise value (GMV) continued in October 2021, driven by festive season spending as well as an increase in the number of merchants & consumers, adoption of new products, transactions for both online and in-store merchants, and deployed devices. GMV processed through their platform for the month of October 2021 aggregated to approximately Rs 83,200 crore (USD 11.2 billion), a growth of 131 per cent over the month of October 2020.  

The monthly transacting users (MTU) have consistently grown in FY2021 and in the first two quarters of FY2022 along with the trajectory continued in October 2021 with 63 million MTUs, growth of 35 per cent YoY over the 47 million MTUs in October 2020.  

As outlined in the company’s prospectus, the trend of growth in GMV/MTU representing one facet of  its consumer and merchant engagement has continued to increase since the second quarter of FY 2021 and in October 2021, monthly GMV/MTU increased to Rs 13,217 (USD 177), growth of 71 per cent over Rs 7,736 (USD 104) for the month of October 2020. 

The lending business has seen good adoption since the launch of products such as Paytm postpaid and personal loans with financial institution partners. Due to a cautious approach in making new disbursements due to the second wave of the COVID-19 pandemic in May 2021 & June 2021, the company processed a total of 1.4 million loans through its financial institution partners in Q1FY2022.   

The company saw a continued recovery in the segment as its financial institution partners’ disbursal almost doubled with over 2.8 million loans in Q2 FY 2022. The month of October 2021 saw a continued increase in the adoption across different financial services products. The lending business continued to show very strong growth as a result of the rapid scale-up of all of company’s lending products, including postpaid, consumer loans, and merchant loans. Company’s financial institution partners disbursed a total of 1.3 million loans in October 2021, aggregating to a total disbursal of Rs 627 crore (USD 84 million), implying a 472 per cent increase in the numbers of loans disbursed YoY and a 418 per cent increase in the value of loans disbursed YoY.