Paytm IPO

One97 Communications Ltd. IPO - SWOT Analysis

Strengths:
Paytm serves as an ecosystem that allows companies to take advantage of market opportunities at scale. Paytm has established itself as a trustworthy company. Its strength lies in the fact that it has tons of insights into Indian consumers and merchants. The fact that it creates technology in-house adds to its strength.

Today, it has diversified its offerings with a vast portfolio of services. This, combined with the company's lucrative offers, has been instrumental in expanding its customer base over the years. Since digital payments are gaining significant traction, especially after the pandemic, it bodes well for the company.However, Paytm faces stiff competition against market-dominant tech firms, both domestic and international; some of these companies have greater financial resources and a substantially larger base of consumers than Paytm does.


Weaknesses:
Paytm’s weakness lies in its dependence on existing merchants to maintain and grow relationships and increase transactions. Furthermore, Paytm has a history of net losses and it has failed to maintain or improve upon its tech infrastructure

Paytm has incurred net losses for the last three years, including a restated loss for a year including discontinued operations of INR 4,235.5 crore in FY19, INR 2,943.3 crore in FY20, and INR 1,704 crore in FY21. Paytm is also dependent on social networks and search engines largely controlled by American tech giants in the Indian market.


Opportunities:
The ongoing Covid19 pandemic has increased the need for cashless, digital payments and has increased the scope of Paytm’s consumer base.


Threats:
The competitive market within which Paytm operates proves to be a threat as consumer needs and technology constantly evolve and Paytm must be able to keep up with this. Its dependency on third parties for certain portions of its business dealings can prove to be a threat in the long run. PhonePe which is supported by Google and Walmart has already overtaken Paytm in one area that is mutual to the two, indicative of the threat it poses.