Indian fintech giant Paytm, owned by One97Communications, is expecting a slowdown in its personal loan growth while predicting a surge in merchant loans, according to recent regulatory filings. The company's personal loan growth is forecasted to decelerate from three-digit year-on-year (Y-o-Y) growth to a projected 30-40% Y-o-Y on its current base. This projection is accompanied by a quarter-on-quarter (Q-o-Q) decrease in personal loans disbursed and a minor drop in loan value.
In response to risks from first-time borrowers and shorter tenor loans, Paytm has reduced such loans. This strategic move has led to longer average tenure of 16 months and larger loan sizes with an average ticket size of ₹1,65,000. As of September 2023, the company had disbursed loans to 11.8 million unique users.
On the other hand, Paytm's merchant loans are forecasted to grow by 50-60%. In the second quarter of fiscal year 2024 (Q2FY24), the company disbursed 0.18 million merchant loans, marking an increase from the previous quarter. The value of these loans also rose by 19% to ₹3,275 crore in September 2023. Merchant loan penetration is at 6.4% out of Paytm’s total deployed merchant devices.
The company aims to grow its credit business by penetrating its existing user base with three credit products: Paytm Postpaid, personal loans, and merchant loans. The penetration of personal loans among Paytm's Monthly Transacting Users (MTUs) stands at 1.1%.
Paytm also reported a reduced net loss and an 8% Q-o-Q rise in total income to ₹2,662.5 crore for Q2FY24. Year-on-year, the total income rose by 32.2%. In Q2FY23, the company posted a larger loss of ₹571.1 crore. The revenue from operations in Q2FY24 was ₹2,518.6 crore (INR100 crore = approx. USD12 million).
Paytm's device subscriptions have also seen growth, with over 9.2 million merchants subscribing to Paytm's devices including soundboxes and Point-of-Sale (POS) devices. The soundbox segment includes a pocket soundbox, a card soundbox, and a music soundbox. Analysts predict sustained growth in this area for three years due to innovation and strong distribution channels, which could drive merchant loans growth as soundboxes penetration among merchants improves.
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