IPO-bound Paytm sees revenue drop, cuts losses by 42% in FY21

IPO-bound One97 Communications Ltd, the parent brand which owns Paytm, saw its consolidated revenues shrink by 11% to ₹3186.8 crore for fiscal year 2020 -2021 (FY’21) compared to ₹3540.77 crore in FY’20, according to the company’s annual report sent to shareholders on Saturday.

With a drop in revenues due to the pandemic, the company also cut losses by 42% to ₹1701 crore in the fiscal ending March 2021 (FY’21), on a consolidated basis. For FY’20, the company had cut losses by 30% to ₹2942.3 crore.

The drop in losses also comes on the back of shrinking expenses. Paytm’s total burn reduced by 22% to ₹4,783 crore in FY’21 from ₹6,138.23 crore in FY’20.

"Despite a significant disruption in the business of our merchant partners due to the ongoing pandemic, especially in the first half of the year - we have had a minimal impact on revenues, due to strong recovery in the second half of the year," said a Paytm spokesperson, replying to Mint’s queries.

As Paytm reduces burn, its losses continue to be a matter of concern during its listing process.

In January, this year, Paytm founder Vijay Shekhar Sharma had given guidance that the company could potentially look to break even in 2021, with profitability in sight.

The company, which is gearing up for its public debut by November-end this year, is expected to file its draft red herring prospectus (DRHP) by July, and conduct investor roadshows by August for its pre-IPO fundraise.

Last week, Mint first reported that the company was looking to raise $1billion-$1.5 billion as part of the primary share sale, during its initial public offering (IPO) worth at least $3 billion.

The company is expected to take a qualified institutional buyers (QIB) route to list, where it will raise primary funds from a fresh issue of shares to QIBs, as per norms of the Securities and Exchange Board of India (Sebi), sources told Mint.

It is in the final stages to appoint bankers and is in talks with Axis Capital, ICICI Securities, and SBI Capital Markets, along with JP Morgan, CitiGroup and Morgan Stanley, to kickstart the IPO process.

The IPO will also give a liquidity event for long-term shareholders as they look to offer a portion of their stake to retail investors.

At present, Alibaba Group Holding Ltd and its payments arm ANT Financial hold almost 37% stake in the payments major, while Softbank through its Softbank Vision Fund and Elevation Capital (formerly SAIF Partners) hold almost 20% stake each in the entity. Founder Vijay Shekhar Sharma’s stake stands at 14.67% in the company.

One 97 Communications currently houses the company’s movie and travel ticketing business; its wealth management platform, Paytm Money; its online payment gateway business, Paytm Payment Gateway, along with its offline point-of-sale business.

It also houses the company’s insurance broking and credit business along with other subsidiaries.