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paytm: Stock price not in our control, focus is on profits: Paytm CEO Vijay Shekhar Sharma

parent ’ founder and chief executive Vijay Shekhar Sharma reiterated on Friday that his employee stock option grant would not vest until the company’s share price crossed that at the initial public offering.

Speaking at the company’s first annual general meeting as a listed company, held virtually, he also said Paytm was on track to turn operationally profitable by September next year.

Paytm’s shares on Friday ended at Rs 771.85 on the BSE, down 1.86% from the previous close and 64% below the November 2021 IPO price of Rs 2,150 a share. But they have climbed more than 50% from the low of Rs 511 hit on May 12 this year.

In April, Sharma had written to shareholders stating that his stock grants would be vested to him only after the shares crossed the IPO price on a sustained basis. He had also said the company was targeting an operational breakeven by the end of September next year.

During the interaction with Paytm’s top management at the AGM, shareholders asked about the company’s profitability prospects, its expansion plans, views on mergers and acquisitions and its business model.

“We are committed to building long-term profit. My Esop grant is not vested until Paytm market cap has not crossed IPO price,” Sharma said in his opening remarks to shareholders on Friday evening.

Proxy advisory firms Institutional Investor Advisory Services India (IIAS), InGovern and Stakeholders Empowerment Services had advised shareholders to vote against the reappointment of Sharma as the CEO and managing director.

“Vijay Shekhar Sharma has made several commitments in the past to make the company profitable, however these have not played out. We believe the board must consider professionalising the management,” IIAS had said in its note to shareholders.

Other resolutions to be passed by the company’s shareholders included Sharma’s remuneration for the next three financial years, reappointment of Madhur Deora as executive director, president and chief financial officer of the company, reappointment of early-backer Elevation Capital’s co-managing partner, Ravi Adusumalli as director of the company. These were not discussed at the AGM.

Some shareholders at the AGM showed dismay towards the loss they suffered on the investment made in Paytm’s IPO.

Sharma said while profitability had an important role in a company’s share price, it was still not in management’s control as there were many other sentiments as well which would affect the price. “We are ensuring the company is trying to be profitable. I can promise you that. As they say, in due course, the stock price will take care of itself,” Sharma said.

Replying to queries on international expansion, Sharma said the company was already present in Japan through PayPay, but there was no intention to distract itself with overseas expansion right now, as the focus remained on the domestic payments and credit business.

“We want to make India profitable first and generate free cash flows. We believe that there is enough opportunity in India to go deep. There are no international expansion plans for Paytm in the short or mid-term,” said Sharma.

A lot of companies are doing a variation of what Paytm does, and healthy competition helps in expanding the overall market, Sharma said, referring to competition.

Madhur Deora, Paytm’s group chief financial officer and president, addressed questions on attrition and said: ”Our employee attrition rate is 2-2.5% per month and we are able to attract people from all backgrounds.”

Paytm, at present, does not see an impact from increasing interest rates, he said.

For the quarter ended June 30, Paytm reported a consolidated loss of Rs 645.5 crore, compared with Rs 381.9 crore a year earlier. On a sequential basis, the loss was 15% lower.

Total income for the group grew by 88% on year to Rs 1781.6 crore. On a sequential basis, the revenue growth was 8%.


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