Paytm junks layoff reports as SVP Praveen Sharma exits

Fintech major Paytm has denied reports of a 25-50% cut in jobs in specific business segments of the company, terming such reports as "baseless and inaccurate".

The company, however, said at the moment, it's conducting an annual appraisal to assess the team's performance and role alignments, which does not reflect layoffs. The company has said it's not engaged in churning but, within the teams, efforts are being made towards restructuring in the wake of performance-related adjustments.

"The claims of layoffs affecting 50% of our workforce are unfounded and misleading. We are focused on sustainable growth, innovation, and providing exceptional service to our customers. We urge our stakeholders and the public to rely on factual and verified information from official sources and disregard speculative narratives," the company says.

Paytm, however, informed the exchanges about the exit of Praveen Sharma, senior vice president - business, who had tendered his resignation on March 23, 2024. "He will be relieved from the services of the Company w.e.f. close of business hours on March 31, 2024.” Praveen Sharma says he has decided to pursue other opportunities and hence was resigning from his role in Paytm.

Paytm share closed 1.79% down at ₹403.50 on the NSE on Friday. Brokerage major Motilal Oswal, in its latest report on Paytm, has revised its target price and maintained a "neutral" stance on the stock. It says the brokerage remains “watchful” on the ongoing business transition and Paytm’s ability to recover lost business and resume growth trajectory over FY25-26E. The brokerage has estimated that Paytm’s FY25E revenue could decline by 24%, while contribution profit could drop by 30%.

"We estimate contribution margin to sustain at 51% over FY25E (vs. 56% in FY24)...we revise our TP to INR530 (about 29% upside) based on 15x FY28E EV/EBITDA discounted to FY26. Our valuation corresponds to 2.8x P/Sales for FY26E. We will revisit our rating post 4Q results and in the interim maintain our Neutral stance on the stock," the brokerage says.

Paytm has been under regulatory scrutiny for some time, with its subsidiary Paytm Payments Bank Ltd (PPBL) receiving multiple regulatory warnings, which were followed by severe business restrictions imposed by the RBI.

The brokerage says the RBI’s restrictions have put the company at risk of losing customers and merchants, disrupting its growth trajectory. However, despite this, the business volumes in February show a “moderate” impact. “We anticipate a further decline in UPI transaction volume/value data in Mar’24 as well.”

Notably, Paytm had recently received the National Payments Corporation of India’s (NPCI) approval to function as a third-party app provider, which would enable it to work like its peers, Google Pay and PhonePe. Paytm has also tied up with Axis Bank, HDFC Bank, SBI, and Yes Bank to ensure smooth business migration.