Paytm plans to rationalise its overseas subsidiaries, many of which are tied to legacy One97 Communications' legacy business, mostly related to providing services to telecom businesses, according to chief financial officer Madhur Deora.
Speaking during the company’s earnings call, Deora said: "We have many subsidiaries, direct or step-down, in the Middle East, Southeast Asia, South Asia, and Africa. Nearly none of them relate to Paytm's core business but rather to the old One97 (Communication) business, providing marketing services to telecom operators. In many cases, local subsidiaries were required to operate in those regions. Over the next three to six months, we’ll look to reduce the number of these subsidiaries."
On Monday, Paytm announced that its subsidiary Mobiquest Mobile Technologies Private Limited has approved the sale of 100 percent stake in its wholly owned subsidiary Xceed IT Solutions Private Limited (Xceed). Formed in 2005, Xceed operates in the field of information technology, specifically engaged in computer programming, consultancy, and related activities.
Post this transaction, Xceed will cease to be a step-down subsidiary of the company. The expected date of completion of the sale is February 28.
In another news, Paytm also announced to set up businesses in UAE, Saudi Arabia and Singapore via its subsidiary Paytm Cloud Tech, to leverage its tech-enabled merchant payments and financial services in 'similar' international markets, and seek local licenses and partnerships.
Paytm Cloud to set up subsidiaries in UAE, Saudi Arabia, Singapore to leverage services stack
Paytm said it is looking to deploy and monetise its stack of software and services internationally.
CEO Vijay Shekhar Sharma said the company will explore selective opportunities in markets with significant local demand, particularly in the Middle East and Southeast Asia.
"We think the opportunity in these regions is massive. Many of these countries need more solutions in the merchant ecosystem, and we believe our low-cost, high-tech Indian expertise can service these merchants well," Sharma said, adding that the process involves entity formation, license applications, and other groundwork, which could take years.
Deora clarified that initial investments in these ventures would remain modest, saying, "To begin with, we’re allocating up to Rs 20 crore per market. These are largely B2B businesses, so they don’t require large upfront capital."
Profitability targets
During the call, the management expressed optimism about achieving profitability targets, highlighting the company’s improved efficiencies. This comes after the fintech firm reported a narrower sequential third-quarter (Q3FY25) adjusted loss as its payments business recovered from the winding down of its payments bank unit.
Paytm Q3 results: Net loss narrows to Rs 208 crore, revenue declines 36%
"We’re very close to EBITDA before ESOP profitability, even without the UPI incentive. If we had received this quarter's UPI incentive, we’d already be profitable. We expect to reach PAT profitability in the next two or three quarters," Deora explained.
He added that the company is focused on long-term operating leverage. "While EBITDA and PAT break-evens are important milestones, the goal is to achieve double-digit EBITDA margins soon and translate that into substantial PAT."
The CFO assured investors that the company’s capital expenditure (capex) will not revert to FY24 levels, emphasising a streamlined approach.
Lending business sees growth, but partners wary of risks
Paytm expects steady growth in merchant loans while observing caution in the personal loans segment. "Lending partners are cautious about unsecured loans due to the credit cycle," Sharma noted. However, personal loan disbursements are expected to perform better in FY26 compared to FY25.
On merchant loans, Sharma said: "The momentum is encouraging, and we foresee steady growth in this segment."
Roadmap for wallet business, Insurance in progress
Sharma revealed plans to revisit the wallet business, contingent on regulatory clarity. "We want to do it, we are waiting for the final outcome on Paytm Payments Bank and will take a call accordingly. The idea is that we want to do it," he said.
For mutual funds and insurance, the focus remains on customer acquisition and embedded insurance offerings. "Mutual fund SIPs and insurance products like health and auto are strong contributors to the bottom line. They are work in progress," Sharma noted.
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