Most of One97’s group companies are in the red. For instance, Paytm General Insurance and Paytm Life Insurance businesses have reported no revenues so far.

In the e-commerce space, where the company was hoping to compete with incumbents Amazon and Flipkart, it hasn’t made a mark so far.

“In the last two to three years, the pivot has been more towards financial services rather than e-commerce,” Ankur Bisen, senior vice-president of Technopak Advisors said. “But I think that is where they (Paytm) are seeing an opportunity to make money, with the assumption that their strategies and initiatives will unfold as planned.”

Should you invest in the Paytm IPO?

While experts have a positive view of Paytm’s IPO, they warn that investors will need to stay invested in the stock for some time to get good returns. After all, the firm could see a strong turnaround in its fortunes when it starts making money as it would add to investors’ confidence

And achieving that milestone is not out of reach. Paytm may break even in 12-18 months with increased financial discipline and targeted strategic investments, according to Gautam Chhugani, director of financials, fintech, crypto at brokerage firm Bernstein. “We expect Paytm’s revenue base to double by FY23 (the year ending March 2023) to around $1 billion, with non-payments revenue contributing around 33%, led by credit tech,” Chhugani said in a pre-IPO primer on Paytm released in May.

The company itself, however, has not expressed such hope. Paytm expects it will “continue to incur net losses for the foreseeable future and may not achieve or maintain profitability in the future,” it said in its pre-IPO documents filed with SEBI. The company listed out several risk factors that may impede its revenues and in turn profitability, which included the possibility of higher payment processing charges, and an increase in operating expenses in the future.

“Our profitability depends on the cost-effectiveness of our business…when we become a listed company, we will incur additional significant legal, accounting, and other expenses that we did not incur as an unlisted company,” Paytm said in the prospectus.

On the other hand, the company’s chief executive and founder Vijay Shekhar Sharma in January had told the Reuters Next conference that Paytm may turn profitable this year due to an increase in the use of its payment platforms during the pandemic.

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