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Paytm Touches Upper Circuit In Fourth Straight Session; Shares Near INR 400 Mark

Inc42Inc42 · 1y ago
Paytm Touches Upper Circuit In Fourth Straight Session; Shares Near INR 400 Mark
Medial

Paytm shares have seen a positive turnaround after a sharp decline due to the Reserve Bank of India's (RBI) crackdown on Paytm Payments Bank. RBI extended the deadline on the bank's business restrictions, and Paytm announced shifting its nodal account to Axis Bank, providing some optimism. Paytm shares gained 21.5% since Friday, and several brokerages view the regulatory actions as restricted to the Paytm Payments Bank entity, expecting limited long-term impact on the overall business. However, there are concerns regarding potential declines in payment GMV and the impact on payment processing margin. The Enforcement Directorate's investigation into possible foreign exchange violations has not found any breaches so far.

E-comm unicorn DealShare’s gross revenue nosedives 75% in FY24

EntrackrEntrackr · 8m ago
E-comm unicorn DealShare’s gross revenue nosedives 75% in FY24
Medial

DealShare underwent a management change in the last fiscal year as three co-founders left the firm, which has visibly impacted its financial performance in FY24. The company’s gross scale declined by 75% in the fiscal year ending March 2024, while losses decreased by 66%. DealShare’s gross revenue from operations fell to Rs 499 crore in FY24 from Rs 1,963 crore in FY23, its consolidated financial statement sourced from the Registrar of Companies (RoC) shows. Collection from traded goods shrank 74.7% to Rs 495.8 crore for the Jaipur-based company, whereas income from marketing services also narrowed 44.3% to Rs 3.3 crore during the last fiscal year. Cost of Material was the largest burn for the company which stood at Rs 529.3 crore in the last fiscal year while it incurred Rs 99 crore on employee benefit expenses which decreased 54.7%. Meanwhile, depreciation and amortization expenditures were reduced by 58.8% to Rs 14.75 crore. With other expenses of Rs 123.58 crore, its total expenses fell 69.9% to Rs 768.18 crore during the last fiscal year. While the gross scale dwindled significantly, the firm managed to cut down losses by 66% to Rs 167.7 crore in FY24 from Rs 502 crore in FY23. Its ROCE and EBITDA margin stood at -12.2% and -25.26%, respectively, on a unit basis, DealShare spent Rs 1.54 to earn a rupee in FY24. As of March 31, 2024, DealShare had a cash and cash equivalents of Rs 108.64 crore while bank balance (excluding cash equivalents) jumped three fold to Rs 292.3 crore from Rs 94 crore in the previous year. Meanwhile, its trade receivables decreased to Rs 525.7 crore in FY24. The last fiscal year (FY24) was quite challenging for DealShare as the firm let go of more than 100 employees and it had to shut down its B2B vertical. Out of four, three co-founders have left the firm and currently, its retail business chief Kamaldeep Singh is leading the firm. According to startup data intelligence platform TheKredible, DealShare has raised $393 million to date from investors like Tiger Global, ADIA, Alpha Wave, and Kora Investment. Soon after becoming a unicorn in January 2022, it raised another $45 million at a valuation of $1.7 billion. If the exit of three founders was not enough, the sharp drop clearly indicates all is not well with the firm. In this season of wholesale changes, a new leadership team seems keener to start on a clean slate perhaps, by withdrawing from many deals and processes that the previous founders found acceptable. One hopes they have good reasons for that. It is not an uncommon problem in India to have founders holding on to the ‘secret sauce’ that keeps their forms humming, leading to a sharp drop in case the relevant person leaves. The hope usually is that the firm will reach enough scale and credibility to manage on its own. In this case, that has clearly not happened quickly enough for DealShare, despite significant topline growth. A 75% decline from a significant size indicates deeper issues at the firm. Or that it would take much more than a single financial year to resolve. We would comfortably place DealShare outside the Unicorn club for starters, if investors haven’t already done so.

Curefoods reports Rs 635 Cr income in FY24, halves losses

EntrackrEntrackr · 6m ago
Curefoods reports Rs 635 Cr income in FY24, halves losses
Medial

Indian cloud kitchen major Curefoods reported a 53% year-on-year growth in operating scale for the fiscal year ending March 2024. At the same time, the Bengaluru-based firm halved its losses by significantly reducing advertising costs. Curefoods’ revenue from operations soared by 53.17% to Rs 585 crore in FY24 from Rs 382 crore in FY23, shows its consolidated financial statement sourced from the Registrar of Companies (RoC). Curefoods is a cloud-kitchen platform which operates brands like EatFit, Yumlane, Aligarh House Biryani, Masalabox and CakeZone. At present, it has over 100 kitchens across 12 cities in India. The sale of these foods was the sole source of revenue for the company in the last fiscal year. The company also made additional Rs 50 crore from interest income pushing Curefoods’ total income to Rs 635 crore in FY24. On the expense side, the cost of materials remained the largest component, increasing by 33.72% to Rs 229.6 crore. Advertising expenses were reduced by 50.8% to Rs 52.8 crore, while employee benefit expenses rose by 43.18% to Rs 148.2 crore. Guarantee commission expenses spiked 56% to Rs 109.2 crore, while depreciation costs also rose by 45.2% to Rs 62 crore. In the end, Curefoods’ total expenses nearly doubled to Rs 806.8 crore in FY24. Due to sharp decline in advertising costs, the company managed to reduce its net loss by 50% to Rs 172.6 crore in FY24. Its ROCE and EBITDA margin stood at -23.31% and -12.88%, respectively. On a unit basis, Curefoods spent Rs 1.38 to earn a rupee in FY24. As of March 2024, the firm reported Rs 326 crore of current assets in FY24 including Rs 37.5 crore of cash and bank balance. As per startup intelligence platform TheKredible, Curefoods has raised more than $200 million to date from the likes of Binny Bansal’s Three State Ventures, Accel, Chirate and Alteria. Since its inception the Ankit Nagori-led company has also acquired more than a dozen cloud kitchen brands such as Yumlane, Smoodies, Cakezone, Maverix, Nomad Pizza, among others. Curefoods is the second-largest player in the cloud kitchen segment after Rebel Foods. Rebel Foods, which recently raised $210 million in one of the largest funding rounds of 2024, reported an operating revenue of Rs 1,420 crore in FY24. Other notable players in the space include EatClub and Biryani By Kilo. The sharp cutback on advertising costs tells its own story. Poorly crafted brand building, and now, what seems to be a commodification of the delivery business. Driven more by platforms than the restaurant or kitchen owners themselves. We believe in the long term, the high platform dependence does not augur well for anyone, as far as margins go. While pockets of the market will grow, overall market size is not growing at the same rate, and platforms will keep up their margin creep. Will Curefoods become profitable before the margins become worse? No one can say with certainty, but we believe 2025 will see yet more efforts to shake the grip of Swiggy and Zomato on the food delivery business, however doomed that might seem for now. Domino’s remains the only success story thanks to their legacy delivery business, and the difference shows in more ways than one.

FarEye narrows losses by 63% amidst modest growth in FY24

EntrackrEntrackr · 2m ago
FarEye narrows losses by 63% amidst modest growth in FY24
Medial

FarEye narrows losses by 63% amidst modest growth in FY24 FarEye recorded only modest double-digit year-on-year growth in operating revenues for the fiscal year ending March 2024. However, it significantly reduced its losses, cutting them by nearly two-thirds during the same period. FarEye’s revenue from operations rose by 13% to Rs 157 crore in FY24 from Rs 139 crore in FY23, according to its consolidated financial statements recently filed with the Registrar of Companies (RoC). This marks a sharp slowdown from the 40% year-on-year growth the Tiger Global-backed company reported in FY23. FarEye provides software solutions to manage large logistics platforms’ supply chain and delivery across manufacturing, e-commerce et al. The sale of logistics services was the sole source of revenue for the company. The cost structure saw a dramatic reset as employee benefit expenses fell 39% to Rs 153 crore in FY24. Information technology expenses decreased by 6% to Rs 46 crore, while legal charges and advertising expenses shrank by 43% and 60% to Rs 23 crore and Rs 8 crore, respectively. Other overheads also contracted by 22% to Rs 39 crore in FY24. Overall, FarEye’s total expenses dropped by 34% to Rs 269 crore in FY24, from Rs 410 crore in the previous fiscal year. The stringent cost controls helped the company to bring down its losses by 63% to Rs 89 crore in FY24, a sharp improvement from Rs 243 crore loss in FY23. Its ROCE and EBITDA margin improved to -26.82% and -45.83% respectively. On a unit basis, FarEye spent Rs 1.71 to earn a rupee of revenue in FY24, a huge improvement from Rs 2.95 in FY23. The Noida-based firm’s current assets stood at Rs 372 crore, out of which Rs 305 crore are in cash and bank balance. According to TheKredible, FarEye has raised a total of approx $152 million of funding till date, having TCV, Fundamentum, Eight Roads Ventures and Elevation Capital as its lead investors. The company’s co-founders Kushal Nahata and Gautam Kumar together own 13% of the company. An underperformer by any stretch, FarEye’s struggles will worry investors who invested on the promise of opportunities in the booming logistics sector. With its focus on last mile solutions, FarEye has picked a particularly promising niche to target, with over 30% of costs linked to the last mile delivery. However, costs have been consistently high due to a global footprint, and sales have simply not grown as fast as it would have wished. How FY25 goes, considering global disruptions in markets and consequently, with FarEye’s clients both present and potential, is anyone’s guess. We wouldn’t be expecting a sharp change in trajectory anytime soon therefore. With adequate cash balances, the firm certainly has no reason to stress, but another ordinary year will mean it has not really made a worthwhile impact even after a dozen years in the market. That will affect the possibility of further backing as well as valuations in no small way. FarEye needs to see the risks getting closer.

MobiKwik Xtra suspends ‘anytime withdrawals’; draws flak from users

EntrackrEntrackr · 10m ago
MobiKwik Xtra suspends ‘anytime withdrawals’; draws flak from users
Medial

After a crackdown on peer-to-peer (P2P) lending by the Reserve Bank of India (RBI), MobiKwik’s Xtra investors are facing troubles with withdrawals. The issue appears to have been triggered by the change in the withdrawal policy by the platform’s lending partner Lendbox. The change, however, was made without any prior notice, according to some users, who highlighted the problem on X. Many users on the microblogging platform also alleged that Xtra also transferred their investment to other borrowers without their knowledge. This appears strange as the new direction by the central bank doesn’t impact investment made by users. As mentioned above, the halt of anytime withdrawal is likely based on RBI’s master direction which forbids p2p lending as an investment product with features including tenure-linked assured minimum returns and liquidity options. MobiKwik’s Xtra allows users to earn up to 14% return on their investment. The app claims to have disbursed more than 300,000 loans worth Rs 7,373 crore to date. As per the RBI master direction, a lender is not allowed to invest more than Rs 50 lakh in a P2P platform and the maximum investment amount for a single borrower is Rs 50,000. “Due to the amendment of the P2P NBFC master directions issued by the Reserve Bank of India on August 16, 2024, Lendbox has restructured this product which has resulted in the stoppage of anytime withdrawal among other changes. Note that MobiKwik only acts as a channel partner for Lendbox,” said a MobikKwik spokesperson. “Customers will receive principal and interest, as repayments are made by the mapped borrowers. This amount will be available for withdrawal on the 12th of every month. They will be able to see the expected repayment schedule on the MobiKwik app in the next few days, added the spokesperson. Several users of BharatPe’s 12% Club, another p2p lending platform, also took to social media (X) to highlight the issue with anytime withdrawals. In July, ET reported that BharatPe has slowed down the process of onboarding new customers for 12% Club. A media report also said that onboarding by p2p lending platforms has declined by more than 90% since the RBI diktat. Platforms like Liquiloans have already stopped onboarding new users. LenDenClub, Faircent, 13Karat, and CRED Mint are some of the leading P2P lending platforms in India.

RBI asks Visa, Mastercard to suspend card-based commercial payments

EntrackrEntrackr · 1y ago
RBI asks Visa, Mastercard to suspend card-based commercial payments
Medial

In what appears to be another blow to fintech companies, India’s central bank RBI has reportedly asked Visa and Mastercard to bar card-based commercial payments made by companies. It is worth noting that a few fintech companies, such as Enkash, Karbon, and Paymate, allow payments through cards for purposes like payments to suppliers or vendors. Companies usually make business payments through net banking or RTGS, as pointed out by the Economic Times. The development was first reported by Arti Singh. Visa in a message to its partners said that the company has been directed by the regulator to suspend all Business Payment Service Provider (BPSP) transactions until further notice. “Hence, we kindly ask that all BPSP merchants/merchant is registered by yourselves with Visa be immediately suspended till advised by us to the contrary. For avoidance of doubt, any transaction authorized prior to the communication would be settled in the ordinary course of business. We kindly ask that you send us a confirmation at the earliest that such merchants/merchant IDs have been blocked and transactions ceased. Failure to adhere to these instructions could result in regulatory sanction and non-compliance assessment under the Visa rules,” the message is quoted as saying. As of now, it is not clear why the RBI has made this move. According to the ET report, the central bank has been unhappy with payments to merchants who have not followed KYC norms. The report further pointed out that some of the merchants are not eligible to accept card payments. That said, Indian fintech companies have had a hard time in the last couple of years following the regulatory changes. For instance, a popular BNPL firm Zestmoney shut down its operations last year after the RBI issued a series of guidelines and directives for BNPL firms. One of the first major blows came in June 2022 when the Reserve Bank of India (RBI) prohibited all non-bank prepaid instrument issuers from loading instruments with credit lines. This essentially meant these firms could no longer extend credit lines through the prepaid payment instruments, which includes cards and wallets. Until then, BNPL firms partnered with the banks to offer self-branded cards and allowed end users to use them for credits as and when required. Just a few months later RBI’s guidelines for the first loan default guarantee (FLDG) dealt another blow to the BNPL firms. Separately, fintech giant Paytm has been facing similar challenges as the RBI barred Paytm Payments Bank (PPBL) from accepting fresh deposits and continuing banking services after February 29 due to non-compliance. The move, taken under section 35A of the Banking Regulation Act, 1949, also affected Paytm’s other services such as FASTags. Since the announcement, Paytm’s shares have continued to nosedive on the stock exchange. At the time of writing, its shares further crashed by 9%, slipping under the Rs 350 mark, reaching a 52-week low.

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