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Gupta said the company has set up a separate line of business which allows it to offer daily and monthly systematic investment plans (SIPs).
“In the last couple of months, we have also gone out and set up a separate line of business independent of direct mutual funds and are focusing on building newer products, such as daily SIPs, monthly SIPs, and general direct mutual funds where we earn commission,” said Gupta. “It is a decently good number, and the AUM (under new business) though small, is growing rapidly.”Also read | Paytm lending decoded: Where does it stand after slowdown in small-ticket credit?
Now the company is betting on its growing monthly transacting users to cross-sell these products and improve its financial services revenue. At the end of December quarter, Paytm’s total monthly active users stood at 100 million.
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“We have been working on it for the last two years, and only in the last two quarters have we seen the scale of new customer acquisition,” Gupta said. “The depth of customers trading on F&O or equity trading is becoming significantly large for us. Our strength is our distribution franchise and product innovation over other platforms, and we believe this could become a meaningful part of financial services revenue in 12-18 months.”ET had reported in October that large brokers like Groww, Zerodha and Angel One are getting almost 80-85% of their revenues from F&O traders.
As the company curtailed Postpaid loans, revenue growth from financial services distribution showed a slowdown. Quarterly growth in the third quarter stood at 6% compared with 9% in the earlier quarter.
Total revenues from financial services distribution stood at Rs 607 crore for the December quarter, contributing to 21% of its overall revenue.
The company on Saturday said its insurance distribution business has seen an early product market fit, especially across embedded and merchant insurance products.
Offsetting post-paid revenue with high-ticket loans
In the December quarter, overall loan disbursals on Paytm’s platform fell for the first time since its listing in November 2021, on account of its strategy to slow down on small-ticket Postpaid loans.
The company wasn’t disclosing figures on overall loan disbursals when it was private.
Total value of loan disbursals stood at Rs 15,535 crore in the December quarter against Rs 16,211 crore in the September quarter.
Gupta told analysts that Paytm expects that scale down on Postpaid loans will mostly continue in the fourth quarter of FY24, with stability expected in the first quarter of FY25.
“The gross revenue will go away from Postpaid. There will be reasonable compensation by high-ticket loans, which have higher revenue than Postpaid revenue, and their (earnings before interest, taxes, depreciation, and amortisation) EBITDA contribution is also much higher. Maybe, two quarters forward, the loss of Postpaid revenues will get compensated,” Gupta said.
He said approval rates are much higher for high-ticket loans than the less than Rs 2 lakh personal loans segment.
“Their (less than Rs 2 lakh loans) approval rates were in the vicinity of 15-20%. In high-ticket loans, the approvals rates are in excess of 40%, as early trends suggest” said Gupta.
Paytm also expects that as it adds new lending partners to its high-ticket loans, whitelisting of customers for high-ticket loans will improve from 20 million now to 35 million.