Paytm, Policybazaar losses surge in June quarter

As Paytm owner One97 Communications and Policybazaar owner PB Fintech prepare to launch their public share offerings, their recent red herring prospectuses offer a peek into how they performed in the June quarter. The quick view: revenues improved but losses widened.

IPO Valuations: The two fintech Unicorns also announced their IPO price expectations: 

• Paytm has pegged its price band at Rs 2,080-2,150 a share, much lower than its grey market share price of about Rs 3,600 apiece. The company is looking at a post money valuation of $19.3 billion to $19.9 billion. Paytm was valued at $16 billion in late 2019 during its last major private fundraising round.
• PB Fintech is expecting a valuation of $6.1 billion at the upper end of its Rs 940-980 price band. That would be an 85% jump from the $3.3 billion it was valued at in May-June for some secondary transactions, and a 4x increase from its $1.5 billion valuation last year. 

Takeaways from Paytm’s RHP

Revenue growth returns, but losses increase: Paytm’s revenue growth in the previous three financial years was flat. But in the April-June financial first quarter, the company registered a 62% growth in operating revenue to Rs 891 crore. The spike was mainly because of the lower base of the year-ago June quarter, when the business suffered owing to strict Covid lockdowns.

A large part of the revenue growth in the latest June quarter was driven by Paytm’s merchant payments business, with the commerce and financial services units also contributing. Revenue from the commerce and cloud business increased 66% to Rs 201 crore, with contribution profit jumping 198% to Rs 245 crore.