Vijaya Diagnostics IPO envisages to rasie
One97 Communications Limited IPO (“Paytm IPO”) envisages to raise Rs 18,300-crore IPO and will be India’s largest public issue after Coal India fund raising in 2010. Paytm’s IPO consists of a fresh issue of Rs 8,300 crore and an offer for sale (OFS) by existing shareholders worth Rs 10,000 crore. One 97 Communications Ltd is India’s leading digital ecosystem for consumers as well as merchants
One97 Communications ( Paytm) IPO Details:
|Issue opens||8th November, 2021|
|Issue Closes||10th November, 2021|
|Issue Details||Fresh Issue of Equity Shares aggregating upto ₹ 8,300 Cr|
|+ Offer for Sale of Equity Shares aggregating upto ₹ 10,000 Cr|
|Face Value||₹ 1/- Per Share|
|Issue Size (₹ Cr)||₹ 18,300 Cr|
|Bid Lot||6 Shares|
|Price Band||₹ 2,080 – 2,150|
|Issue Structure :|
|QIB||75% of the offer|
|NIB||15% of the offer ( ₹ 2,745 Cr)|
|Retail||10% of offer ( 8,511,627 Shares, ₹ 1,830 Cr)|
One97 Communications IPO | Paytm IPO Review: Presentation video
- ANCHOR ISSUE: Paytm raised Rs 8,235 crore from anchor investors. •The anchor investor round saw participation from Blackrock, CPPIB, Birla MF, GIC and other blue-chip funds leading to 10 times oversubscription of the shares. •Global mutual funds like Vanguard, Fidelity, Standard Life Aberdeen, UBS, RWC; and global tech / fintech-focused funds like Sands Capital, Alkeon, Marshall Wace, Viking, Citadel also participated in the anchor book.
About One97 Communications ( Paytm) IPO
One 97 communications (Paytm) is India’s leading digital ecosystem for consumers and merchants.
It is the largest payments platform in India, with a GMV of Rs. 4 lakh crore in FY21
Paytm offers consumers & merchants, technology-led, easy-to-use digital product and services as well as easy and inclusive access to financial services.
As of June 30, 2021, it offers payment services, commerce & cloud services, and financial services to 33.7 crore consumers & over 2.2 crore merchants.
Paytm started in 2009, as a mobile digital payments platform starting with bill payments and mobile topups, followed by Paytm Wallet, QR code and expanding to offer one of the largest payments platform.
As per Kantar Brandz India 2020 Report, the “Paytm” brand is India’s most valuable payments brand, with brand value of US$ 6.3 billion,
One97 Communications ( Paytm) IPO: Financials
- Largest Payment Platform in India with 40% and 65% volume market share in mobile and wallet payments respectively, but Paytm ranks #3 behind PhonePe and Google Pay, based on value market share, which declined to 9% in Sep 2021 from 14% in July 2021.
- Paytm has increased IPO offer size to INR 18,300 Cr, from its initial offer of INR 16,600 Cr.
- This was on account of not going for Pre IPO Placement.
- Reasons could be company desire to bring IPO at early date or some valuation related issues in attempted pre placement
Post the unexpected bumper listing of Zomato, Paytm shares also moved up in sync in unlisted market & traded at 3000+ for quite some time.
- They have cooled down considerably since then and before the issue opening GMP as a % of IPO price is in single digits.
- Extremely competitive markets with rapid strides in technology Failure to attract merchants & volumes can adversely affect business.
- Dependency on payment services for majority of revenue
- Challenge from UPI, Players like google Pay, Amazon Pay, Jio Pay, Mobikwik, Freecharge , whatsapp, Phone Pee pose big challenge
One97 Communications ( Paytm) IPO: Assessment
- One97 Communications (Paytm) has posted 2% growth in the revenues to Rs 3280.80 crore in FY2020. Further while the revenues declined 15% to Rs 2802.40 crore in FY2021 amid the impact of pandemic.
- Paytm recorded improved revenue growth of 62% to Rs 890.80 crore in Q1FY2022.
- Paytm’s bottomline remains in red due to high operating expenses. There is little visibility when the company will turn profitable.
- Paytm has become synonymous with digital payments through mobile and is the market leader in the mobile payment space.
- Mobile payments are expected to witness 5x growth between FY2021 – FY2026 and Paytm is in a pole position to benefit from this growth.
- Paytm has no listed peers.
- At IPO price of Rs 2150, the company is demanding mcap of Rs 1,39,854 crore.
- This values the company at 44.5 times the post-IPO EV/TTM sales for period ended June 2021. The issue is at Price to book value multiple of 9.6x.
- Recently concluded PB Fintech was offered at 46 x its post IPO EV/ TTM sales for period ending June 2021. The price to book value worked out to be 7.8x.
- Zomato is quoting at EV/mcap of 28x.
- Despite being pioneer and having strong presence in digital payments space, It looks that most of the positives factors are already priced in thein the current valuations.
- I perceive the IPO as risky and will apply only if there is as stringfg demand from QIB as seen in Poilcy Bazzar towards the final hours on Day 3.
- Further GMP though not always meaningful, has been reported to be less than Rs. 100 or even half which is indicative of some doubts on its ability to give moderate listing gains.
- Paytm is a very large issue and with many other large IPOs hitting the market in quick succession, a positive listing for such IPO’s is not assured
- Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.