ONE97 PAYTM-Paytm Karo

Paytm is an Indian digital payment and financial services company that stands for pay through mobile.They were founded in August 2010 by Vijay Shekhar as a fintech company out of Noida, Uttar Pradesh.They served as platforms for DTH and mobile service payments and even briefly launched credit cards in 2012.In 2014, they received funding from SAP ventures which led to the start of the Paytm Wallet.They allowed cashless transactions which was revolutionary in India such that the Indian railways and Uber added it as a payment option.The time couldn’t have been more perfect as on November 2018, the 500 and 2000 rupee notes in India were banned making 98% of Indian currency invalid.Demonetisation resulted in a massive consumer shift from cash to cashless transaction which allowed the growth of Paytm.

Paytm currently trades at 550-650₹ with a market cap of 400B INR.They have 3 key businesses which are the payment services, financial services and commerce and cloud services.For the payment services, they charge a small fee to businesses and consumers annually.For their financial services, they provide easy loans and banking services to individuals with schemes such as the ₹1 gold where you can invest in virtual gold.Commerce and cloud services are mainly transacted under Paytm mall where they promote local businesses and even promote third party selling on their e-commerce website Paytm Mall.Paytm is turning into an all inclusive banking and financial services app for the new millennium.

Paytm has a median price forecast of ₹450 with a high estimate of ₹1300 and a low estimate of ₹210.The median represents a 33% decrease from the last trading price.Analysts have mixed opinions on Paytm for the simple reason of its previous slump since its IPO.Whereas, some attribute it to excess pressure on a stock.Paytm had started trading at ₹1560 and grew till ₹1800 for 8 days until starting its slump of over 8 months till ₹600.This is a 62% decrease for which one of the greatest factors is the excess overvaluation.

Paytm was originally a startup that dealt in telecommunication payment systems.The major turning point was the funding they received from SAP ventures which allowed them to diversify into new ventures such as payment wallets for travel and utilities.By the end of 2015 , they had crossed over 500M$ in transactions.This early success attracted many foreign investments from the Alibaba Group, Mediatek and even Tata and Sons at a 5B $ valuation.In 2016, the demonetisation in India is what spurred the cashless revolution in India which acted to Paytm’s advantage.They had the first movers advantage in the payment app space.In 2018, they received yet another round of funding from SoftBank and Berkshire Hathaway acquiring 7% of the company.This allowed the company to finally start dealing in the financial services.They introduced many initiatives such as the online gold and gold gifting services plan.The start of in-chat payment systems and free bank transfers furthered their market share.The payments system market in India is an extremely competitive segment with players like PhonePe,BharatPe and Google Pay.Every competitor was able to utilise the platform and awareness spread by Paytm and thereby reduce costs.Now, an even tougher competition stands ahead for Paytm which is crypto. They had a huge consumer base in Japan which was completely lost to crypto payments in a matter of 3 months.The biggest issue faced by Paytm is the failed IPO.Paytm was an overvalued company with a valuation of 23B $ at the time of their IPO.Investors had mixed emotions towards the company which caused the IPO to be oversubscribed only 1.89 times.At the time of the IPO, Paytm was still a loss making entity and had massive debts with very few revenue models which further feared investors.The slumping stock price is another negative sign for investors.Paytm is solving a major gap in the Indian economy but does it still stay relevant in this competitive payment environment is the main question to be answered.