Paytm posted a wider loss in the fourth quarter on Wednesday and warned of further financial impact in the current quarter as the Indian digital payments firm absorbs the full impact of the Reserve Bank of India's (RBI) directive to wind down its banking unit.
The company's consolidated net loss widened to 5.5 billion rupees ($66.08 million) from 1.68 billion rupees a year ago.
It was expected to post a net loss of 3.99 billion rupees in the reporting quarter, a median of three analysts showed, as per LSEG data.
Paytm wrote down the value of its entire investment in Payments Payment Bank Ltd (PPBL) - worth 2.27 billion rupees - considering "future uncertainties" over the latter's business operations, it said in an exchange filing.
The RBI in late January ordered PPBL to stop accepting fresh deposits in its accounts or digital wallets beginning March due to non-compliance with norms.
"Our fourth quarter 2024 results were impacted by temporary disruption on account of UPI (Unified Payments Interface) transition etc and permanent disruption because of PPBL embargo," Paytm said in an exchange filing.
In a statement, the company further said the full impact of that move would be felt in the April-June quarter, when Paytm expects its loss before interest, taxes, depreciation and amortization to be between 5 billion rupees and 6 billion rupees.
"We are confident of seeing meaningful improvement starting from the second quarter," the company said, adding that it was also planning to save between 5 billion rupees and 6 billion rupees in employee costs over time as it becomes a "leaner" organization.
"Clearly, profitability is under severe pressure due to the impact from RBI regulations," Macquarie analyst Suresh Ganapathy said in a note.
One of India's first fintech firms to go public, Paytm said its consolidated revenue from operations fell to 22.67 billion rupees for the January-March quarter from 23.35 billion rupees a year earlier.
Revenue from the payments business, which contributes roughly 69% to the total, rose 7% on-year but was down 9% sequentially.
A number of lending partners halted loans given out via the platform following the RBI's move, impacting its ability to earn fee income. The value of loans distributed fell 54% to 57.99 billion rupees, the company said.
Revenue from its financial services business, which includes the loan business, fell 36% in the fourth quarter.
However, loan disbursal increased to 20 billion as of April 2024 after falling to 9 billion rupees in February 2024, which Macquarie's Ganapathy said was "the good part" of the results.
Paytm's shares, which have lost over 50% of their value since the RBI's order, reversed losses from earlier in the day and were trading 1.5% higher in the afternoon.