Here’s why PayTM is valued at $5 billion

Vijay Shekhar Sharma’s PayTM has grown by leaps and bounds and Prime Minister Narendra Modi’s demonetisation was icing on the cake for the digital mobile wallet firm.

PayTM’s growth is now also guaranteed after it received Reserve Bank of India’s (RBI) approval for payments bank. So, as soon as PayTM Payments Bank comes into play, there will be stopping for the company.

Despite several losses, PayTM is going strong and is currently valued at $5 billion due to multiple reasons.

In a Quora post, where reason behind PayTM’s high valuation was asked, many contributors gave different insights to PayTM’s high valuation.

Here are the 2 reasons why PayTM is valued so high

1. Users: Imagine if PayTM is able to earn a rupee INR 1/day from all 10 Cr users. PayTM saw over 130 million downloads, which means more 13 crore users. Let’s take the approximate number as 10 crore users earnings of PayTM in a day- Rs 10 crore. Imagine if PayTM is able to earn Re 1 per day from all 10 crore users, this translates to Rs 10 crore and in one year Rs 3650 crore and Rs 18000 crore if it makes Re 1 every time you take your wallet out of your pocket for payment.

2. Another way of looking at this is Vijay Shekhar Sharma currently holds a 21.33% stake in One97, while SAIF Partners holds 30.81% share. Jack Ma-led Alibaba and Alipay collectively hold 40% in the company as Alibaba Group has invested $700 million in Paytm so far. The Chinese e-commerce major is planning to start an e-tailing business in India early next year, and is said to be considering using PayTM's commerce entity as the launch vehicle.