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Hard to decipher one-day market movements: Paytm Group CFO and President

In a Q&A, Madhur Deora says the company needs to communicate better and shares his key learnings

Paytm
Paytm founder and CEO Vijay Shekhar Sharma along with President and Group CFO Madhur Deora poses during the company's IPO listing ceremony at the Bombay Stock Exchange (BSE) in Mumbai (Photo: Reuters)
Samie ModakNeha Alawadhi Mumbai/New Delhi
5 min read Last Updated : Nov 19 2021 | 1:09 AM IST
The country’s largest IPO had a disastrous debut with its stock crashing 27 per cent. Madhur Deora, President and Group Chief Financial Officer, Paytm says it’s hard to decipher what went wrong as many investors were comfortable investing at the IPO price. In an interview to Neha Alawadhi & Samie Modak, Deora says the company needs to communicate better and shares his key learnings. Edited excerpts:

In hindsight, do you think the IPO pricing could have been different?

A lot of people have a misunderstanding that a company prices its IPOs at whatever number they want to. Investors, as recently as two weeks ago, were perfectly comfortable at the IPO price. And that is why they invested in the IPO. There are some of those investors, who may be buying or selling at different prices today. That’s completely outside the company's control.

Maybe only a few investors are bullish on the company. Otherwise the stock wouldn’t have crashed the way it did today
The point that you are making that one or two investors might be bullish, and the rest are not, is factually untrue. We had over 70 investors in our anchor round. Eight of them invested in Paytm's IPO, more than they have in any IPO in the history of our country. It is hard for folks like us to decipher one day of market movements. What we can do is make sure that we go out in good faith, when we are announcing earnings and talk about the way we are building our business.

What are the key learnings for you?

Some of these are learnings, while some are suggestions. Firstly, our business model is very different from the business model of any company that exists in India. When you get to the real specifics, maybe it's very different from most companies in the world. Maybe we need to do an even better job of trying to explain to a wide set of investors—what Paytm's business model is, what makes it tick, what are the big opportunities in front of us, and also how they should measure whether we have been successful. The second thing that I can say as a message to shareholders is, we're going to be very responsible with our capital, we're going to be absolutely head down, execution focused.

The two things that we are laser focused on are revenue growth and contribution profit. So in the June quarter, we delivered good growth. We will announce our September results soon. So investors can see how we're doing. Second one is contribution profit, which is how much money do we make after our payment gateway cost, cashbacks, direct costs. That number in June was $33 million (Rs 245 crore), which is 3 times more on a year on year basis.

The scale Paytm has built is commendable but the message from the market is that you were too greedy with the valuations...

Obviously, when you go and list, you hope for your price to go up rather than go down. It is hard to decipher precisely why it would go down. It is also hard to take away from this as to what would you have done differently? We got the bluest of blue chip investors, who are long term shareholders. Maybe, we should have told our story even more, and even more broadly, until people get sick of hearing us we could have just kept telling our story.

There is criticism that you've put your fingers in too many pies...

We are not a vertically-focused company. I don't think we're going to be a company that only does one thing. But maybe, and this is one of the things that we need to explain better, is that we are clearly a platform on which many services will exist right now. It is very, very clear to us why we do what we do. Payments is clearly the engine. And whatever the consumer or merchant wants to access on an app like ours, which can be digitally delivered to them. And especially if it makes our payments business even stronger. So that defines payments, commerce, and financial services. Investors may not understand that framework, and that is our fault. We need to communicate that better, to show discipline in sticking to that framework.

Do you think the payments industry will be able to monetise UPI payments going ahead?

It is hard to predict regulatory trends. We have never told investors that they should expect anything like this. Many of our customers come in through UPI and then they start using other instruments like wallets, which makes us more revenue. They also then move towards commercial financial services. So, that business model works for us.

Why isn’t there enough Indian representation on your board?

The board is not selected on the basis of Indian and non-Indian. We have a lot of people of Indian descent. They're all very good in the fields.

Topics :IPOPaytm

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