Paytm had been dealt a heavy blow when the Reserve Bank had all but ended the operations of Paytm Payments Bank, and this has been reflected in the company’s results.
Paytm has seen its revenue fall by 3 percent compared to the same quarter the previous year, and its losses have risen by 220 percent. In Q4FY24, Paytm reported a revenue of operations of Rs. 2,261 crore, compared to a revenue of operations of Rs. 2,334 crore in the same quarter last year. Paytm’s losses rose 3.2x, rising from Rs. 168 crore in the March quarter last year to Rs. 550 crore now.
A large part of Paytm’s losses were because it recognized an impairment of Rs. 227 crore in the value of its investment in Paytm Payments Bank. In February this year, the Reserve Bank had stopped the bank from accepting new deposits over “persistent non-compliances”. This had essentially crippled the operations of the bank, and forced Paytm to migrate customers away from its FasTag and other products.
Paytm acknowledged the impact of the RBI curbs in its filing to stock exchanges. “Our Q4 FY 2024 results were impacted by temporary disruption on account of UPI transition etc, and permanent disruption because of PPBL embargo,” it said. “PPBL products like the Paytm wallet and FASTag were distributed by Paytm. Due to the current embargo on these products, we anticipate the steady state annualised direct impact on EBITDA to be ~ Rs. 500 Cr, as previously disclosed,” it said. “(We also experienced) temporary disruptions in operating metrics (MTU, merchant base, payment GMV) during February and March. This is expected to have an incremental EBITDA impact of Rs. 100- ₹150 Cr, in Q1 FY 2025 and should start recovering from Q2 as we are seeing stabilization or growth in consumer and merchant base metrics from April/May,” Paytm added.
All this has meant that Paytm will find it even harder to become profitable than it had earlier estimated. The RBI curbs could’ve set the company back by several years, and perhaps more importantly, eroded its trust as a reliable financial partner. And given how the company’s stock has been languishing in recent quarters, it could be long and hard road before it can bounce back to anywhere close to its IPO price.