IPO-bound digital payments player Paytm is banking on youth in small-town India to drive one of its newest businesses, the wealth management arm, Paytm Money.
In a blog titled, ‘How the young Indian millennial invests’, the company said an average Paytm Money user is 28 years old. More so, 60 percent of the users come from beyond the metropolitan cities like Mumbai, Delhi and Bengaluru. An equal number were first-time investors too. Also, women invest twice as much as men do.
Paytm Money, which allows users to trade stocks, invest in mutual funds, buy and sell gold, recorded a combined assets under management of Rs 5,200 crore at the end of FY21, according to the DRHP filed by the company ahead of its IPO. Over six million people currently use Paytm Money in India.
The update on the new business vertical comes at a time when critics are questioning Paytm’s ability to turn profitable in the near future as it plans to go public by the end of the year. While the small-revenue UPI-led payments business runs on the side, Vijay Shekhar Sharma has pivoted to non-payments verticals such as Paytm Money and Fantasy Gaming in search of better margins.
The non-payments side of the business could contribute nearly one-third of Paytm’s revenue by 2023, according to a Bernstein Report.
Currently, the young base of Paytm Money users may give a leg up as the company jogs to Dalal Street and beyond. Nearly 60 percent of the users on Paytm Money are less than 30 years old, tweeted Vijay Shekhar Sharma, CEO, Paytm.
60% of Paytm Money users are less than 30 years ! https://t.co/FjFFQmRXqn— Vijay Shekhar Sharma (@vijayshekhar) August 2, 2021
On an average, a Paytm Money user invested Rs 70,000, mostly in mutual funds (64%) followed by equity (28%) and gold (8%). Overall, mutual funds led the platform’s growth as users made at least 10 lumpsum transactions on an average last financial year, driving up the average amount invested by 29 percent.
“Our users are great in terms of financial discipline. Over 76% of our users did transact in SIPs and 75% of the total transactions were made through SIPs,” said the company in the blog.
On the equity platform, which was launched in the midst of the pandemic in August 2020, over 2.1 lakh accounts have been created as on March 31, 2021. These equity investors on the platform on an average carried out 10 transactions in stocks per month, held Rs 46,000 worth of stocks in the account and traded or invested in 15 stocks. Most users of this asset class were cautious, long-term investors. But, nearly 41 percent have traded intraday, according to the blog.
Gold glittered during the pandemic as stock markets crashed and widespread panic kept investors at bay. Paytm Money saw gold purchases on its platform go up by 59 percent over the previous year, with users on an average buying 1.27 grams of the yellow metal. “Over 2 lakh users created an SIP in gold,” said the blog.
As startups that have become household names -- such as Paytm itself and its rival Mobikwik along with PolicyBazaar and Nykaa that will soon to list on the bourses -- Paytm Money’s offering to let users buy shares in an IPO is quickly becoming the platform’s hottest property.
Ahead of the Zomato IPO, the wealth management platform had launched its new pre-IPO offering, which allowed users to apply for an IPO before its opening in the markets. It received a strong response from its users, largely reflecting the interest among young investors for such IPOs.
"Zomato IPO is the start of an important change in Indian capital markets as we see a very new set of investors and also the startup ecosystem truly taking centre stage,” said Varun Shridhar, CEO, Paytm Money.
According to the insights shared by Paytm Money, 22 percent of applicants for Zomato IPO on Paytm Money were new investors. Also, high interest came from Zomato’s core users. The average Zomato IPO applicant was 27 years old; on an average, two years younger than applicants seen for other IPOs on Paytm Money.
Now, Paytm is planning to launch its Rs 16,600-crore IPO sometime later this year. It may turn out to be a litmus test for Paytm Money as its users place orders for parent Paytm’s IPO.
(Edited by : Shoma Bhattacharjee)
First Published: IST