India's Paytm warns of more financial impact from banking unit wind down

Siddhi Nayak
Updated ·3-min read
Photo illustration of a Paytm logo

By Siddhi Nayak

MUMBAI (Reuters) - Paytm posted a wider loss in the fourth quarter on Wednesday and warned of further financial impact in the current quarter as the Indian digital payments firm absorbs the full impact of the Reserve Bank of India's (RBI) directive to wind down its banking unit.

The company's consolidated net loss widened to 5.5 billion rupees ($66.08 million) from 1.68 billion rupees a year ago.

It was expected to post a net loss of 3.99 billion rupees in the reporting quarter, a median of three analysts showed, as per LSEG data.

Paytm wrote down the value of its entire investment in Payments Payment Bank Ltd (PPBL) - worth 2.27 billion rupees - considering "future uncertainties" over the latter's business operations, it said in an exchange filing.

The RBI in late January ordered PPBL to stop accepting fresh deposits in its accounts or digital wallets beginning March due to non-compliance with norms.

"Our fourth quarter 2024 results were impacted by temporary disruption on account of UPI (Unified Payments Interface) transition etc and permanent disruption because of PPBL embargo," Paytm said in an exchange filing.

In a statement, the company further said the full impact of that move would be felt in the April-June quarter, when Paytm expects its loss before interest, taxes, depreciation and amortization to be between 5 billion rupees and 6 billion rupees.

"We are confident of seeing meaningful improvement starting from the second quarter," the company said, adding that it was also planning to save between 5 billion rupees and 6 billion rupees in employee costs over time as it becomes a "leaner" organization.

"Clearly, profitability is under severe pressure due to the impact from RBI regulations," Macquarie analyst Suresh Ganapathy said in a note.

One of India's first fintech firms to go public, Paytm said its consolidated revenue from operations fell to 22.67 billion rupees for the January-March quarter from 23.35 billion rupees a year earlier.

Revenue from the payments business, which contributes roughly 69% to the total, rose 7% on-year but was down 9% sequentially.

A number of lending partners halted loans given out via the platform following the RBI's move, impacting its ability to earn fee income. The value of loans distributed fell 54% to 57.99 billion rupees, the company said.

Revenue from its financial services business, which includes the loan business, fell 36% in the fourth quarter.

However, loan disbursal increased to 20 billion as of April 2024 after falling to 9 billion rupees in February 2024, which Macquarie's Ganapathy said was "the good part" of the results.

Paytm's shares, which have lost over 50% of their value since the RBI's order, reversed losses from earlier in the day and were trading 1.5% higher in the afternoon.

($1 = 83.2275 Indian rupees)

(Reporting by Siddhi Nayak in Mumbai; additional reporting by Dimpal Gulwani in Bengaluru; Editing by Janane Venkatraman and Nivedita Bhattacharjee)

  • Up next
  • Up next
  • Up next
  • Up next

Latest stories

  • Singapore Airlines And Two More Top Dividend Stocks On SGX

    In recent times, the Singapore market has shown a steady, flat performance both over the past week and year, with expectations of earnings growth at an annual rate of 9.2% in the coming years. In such a stable market environment, dividend stocks like Singapore Airlines offer potential for consistent returns, making them an attractive option for investors seeking regular income streams.

  • Mapletree Logistics Trust Reports an 8.9% Year-on-Year Fall in DPU: Does the Industrial REIT See a Recovery Soon?

    The logistics REIT is seeing headwinds that caused its distributable income to dip. The post Mapletree Logistics Trust Reports an 8.9% Year-on-Year Fall in DPU: Does the Industrial REIT See a Recovery Soon? appeared first on The Smart Investor.

  • Stock market news today: Dow jumps over 650 points as stock surge caps volatile week on Wall Street

    Investors are looking to the Fed-favored inflation data to calibrate the timing and depth of rate cuts.

  • iFAST Corporation Hikes its 2Q 2024 Dividend by 36%: Can the Fintech Continue Raising its Dividends?

    The group released a sparkling set of earnings for the quarter which saw its assets under administration hit a new record. The post iFAST Corporation Hikes its 2Q 2024 Dividend by 36%: Can the Fintech Continue Raising its Dividends? appeared first on The Smart Investor.

  • Fed seen holding rates steady in July, start cuts in Sept

    Before the data, traders had priced in about a 9% chance of a rate cut when the Fed meets next week, but knocked that down to under 7% after a government report showed the economy grew at a 2.8% pace last quarter, faster than had been expected and double the pace in the first quarter of the year. The reacceleration "should help temper concerns about the durability of the expansion and quiet chatter that the Federal Reserve needs to cut interest rates in July," wrote Oxford Economics' Ryan Sweet. Traders of futures contracts tied to the Fed policy rate continue to price in quarter-point interest-rate cuts in each of September, November and December, as they also pared bets on a possible bigger rate cut to start the series.

  • The US economy is pulling off something historic

    The US economy is on the verge of an extremely rare achievement.

  • Fed's preferred inflation gauge shows prices rose at slowest pace since March 2021

    The latest reading on the Fed Reserve's preferred inflation gauge comes just days before the Fed's next policy meeting as investors look for clues on when interest rate cuts might begin.

  • China central bank surprises by lending again at lower rates

    China's central bank surprised markets for a second time this week by conducting an unscheduled lending operation on Thursday at steeply lower rates, suggesting authorities are trying to provide heavier monetary stimulus to prop up the economy. The medium-term lending facility (MLF) operation comes after the central bank cut several benchmark lending rates on Monday, just days after a top leadership meeting, which had outlined other major reforms. The People's Bank of China (PBOC) issued 200 billion yuan ($27.5 billion) in one-year loans under its MLF at 2.30%, down 20 basis points from its previous MLF loan, the bank said in a statement.

  • Singapore home prices slow, rents fall in cooling market

    Singapore private home prices rose less than estimated and rents edged down in the second quarter, following government efforts to tame the real estate boom.

  • Apple's China smartphone shipments drop 6.7% as Huawei surges, data shows

    BEIJING (Reuters) -Apple's smartphone shipments in China fell by 6.7% in the second quarter of 2024, as the tech giant faced intensifying competition from rivals like Huawei, according to data from market research firm Canalys. Apple's total shipments for the quarter ending in June stood at 9.7 million units, down from 10.4 million units in the same quarter last year, Canalys data shows. In contrast, Huawei's smartphone shipments surged 41% year-on-year to 10.6 milion in the quarter, bolstered by the launch of its new Pura 70 series in April.

  • The Soaring Yen Is a Big Concern for Markets. Why the Currency Is a Threat to Carry Trade.

    One thing to keep an eye on today is the Japanese yen. After a long period of weakening, driven by the Federal Reserve's reluctance to cut interest rates and the Bank of Japan's reluctance to raise them, the tables have now turned. The yen has strengthened to about 150 against the dollar from more than 160 just two weeks ago.

  • Google shows investor patience with Big Tech's AI spending might be running short

    Wall Street’s AI optimism shrinks when the main business is under pressure.

  • Dollar treads water after tame US inflation report, yen rally stalls

    NEW YORK (Reuters) -The dollar ended little changed on Friday, pressured by a fall in Treasury yields after a tame U.S. inflation report that investors said kept the runway for the expected September Federal Reserve easing clear. The Commerce Department's June personal consumption expenditures (PCE) price index nudged up 0.1%, as expected, after being unchanged in May, underscoring an improving inflation environment. Year over year, the PCE price index climbed 2.5% after rising 2.6% in May, also in line with forecasts by economists polled by Reuters.

  • Charlie Munger Said 'The Point Of Getting Rich Is So You Don't Have To Get Along With Other People' – He Wanted The Independence, Not The Ferraris

    Last year, just months before his passing at 99, legendary investor Charlie Munger sat down for a rare and insightful interview on the Acquired podcast. Munger, best known as Warren Buffett’s right-hand man and the Vice Chairman of Berkshire Hathaway, shared his wisdom on investing, business, and life. Don't Miss: Can you guess how much the average retirement account balance is? Here’s a hint — it’s only slightly more than a year’s worth of expenses. How much money will a $200,000 annuity pay ou

  • Tesla’s Share Price Rebounded By 56%: Should Investors Jump In or Stay Clear?

    2024 has been a rollercoaster ride for Tesla. With its share prices rebounding 55.6% from its 52-week low, has Tesla broken free from its slump? The post Tesla’s Share Price Rebounded By 56%: Should Investors Jump In or Stay Clear? appeared first on The Smart Investor.

  • Intel Taps Micron Leader To Strengthen AI Chip Strategy

    Intel Corp (NASDAQ:INTC) tapped Dr. Naga Chandrasekaran of Micron Technology, Inc (NASDAQ:MU) as chief global operations officer, executive vice president and general manager of Intel Foundry Manufacturing and Supply Chain organization, effective August 12. Chandrasekaran, an Oklahoma State University, University of California, Berkeley, and University of California, Los Angeles alumni, served as Micron’s senior vice president for Technology Development. Chandrasekaran took over from Keyvan Esfa

  • July 2024 Insights Into Three SGX Stocks Estimated To Be Undervalued

    As of July 2024, the Singapore stock market continues to navigate through a complex economic landscape, marked by cautious optimism among investors. This environment sets the stage for identifying potentially undervalued stocks that may offer attractive opportunities for those looking to diversify their portfolios in line with current market conditions.

  • Stellantis ready to axe brands and fix US problems, CEO says

    Stellantis is taking steps to fix weak margins and high inventory at its U.S. operations and will not hesitate to axe underperforming brands in its sprawling portfolio, its chief executive Carlos Tavares said on Thursday. The warning for lossmaking brands is a turnaround for Tavares, who has maintained since Stellantis was created in 2021 from the merger of Italian-American automaker Fiat Chrysler and France's PSA that all of its 14 brands including Maserati, Fiat, Peugeot and Jeep have a future.

  • The lower the AI exposure, the bigger the problem for Europe's chip firms

    Shares in European semiconductor firms less exposed to AI chips slumped on Thursday as falling demand from their key automotive and industrial clients hit business prospects, on top of a wider sector correction. Chip component suppliers like ASML and ASM International are more exposed to the booming AI chip market and demand from high-end tech clients like Nvidia, TSMC, and Intel. "The more high-end applications, linked to AI, those are doing much better," said ING analyst Marc Hesselink.

  • Bitcoin price falls amid broader stock market downturn

    The cryptocurrency has fallen as investors move away from riskier assets