Things to know about Paytm before placing a bet on its IPO

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Kritti BhallaOct 29, 2021, 18:05 IST
Things to know about Paytm before placing a bet on its IPO
  • Paytm intends to raise ₹18,300 crore from this public issue, at a valuation between $19.3-19.8 billion
  • Paytm IPO will open from November 8 to November 10, at a price range of ₹2,080 -₹2,150 per equity share.
  • One 97 Communications earned ₹3,186.8 crore in revenue in the financial year 2021, with loss touching ₹1,704 crore.
One 97 Communications — the parent company of digital payments giant Paytm — is all set to launch India’s biggest initial public offering (IPO) on November 8. The company intends to raise ₹18,300 crore ($2.4 billion) from this public issue, at a valuation between $19.3-19.8 billion.


This IPO will surpass Coal India’s ₹15,000 crore offering, which happened a decade ago.


Valuation guru Aswath Damodaran, who is a professor at New York University’s Stern School of Business, had also valued Paytm at $20 billion. “...This is the type of stock that you would put 5%, or perhaps 10% of your portfolio in, not 25% or 40%,” he said in a blog post.

Here is a list of things you may want to know before subscribing to Paytm’s IPO:
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Opening date, share price and more

Opening date, share price and more
BCCL

Paytm IPO will open from November 8 to November 10, at a price range of ₹2,080-₹2,150 per equity share. The lot size has been set at six shares.

The company will list on the stock exchanges on November 18, 2021.

Alibaba is the biggest beneficiary of Paytm’s IPO

Alibaba is the biggest beneficiary of Paytm’s IPO
BI India

Paytm intends to raise ₹8,300 crore from fresh issues and the rest ₹10,000 crore would be an offer for sale (OFS) from the existing stakeholders.

China-based Alibaba Group is expected to make the most out of Paytm’s IPO. Its affiliate entities — ANT Group and Alibaba.com — will be selling shares worth ₹5,488 crore (about $733 million) cumulatively. This is nearly 30% of Paytm’s IPO size.

Vijay Shekhar Sharma will be looking to sell shares worth ₹402 crore ($53 million) in Paytm IPO.

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Paytm is eyeing international expansion post this IPO

Paytm is eyeing international expansion post this IPO
Canva

Paytm, in its red herring prospectus (RHP), mentioned that it will use the proceeds from the IPO to grow and strengthen its ecosystem, which includes acquisition of consumers, merchants and strengthening its technology as well as financial services. Besides this, the fintech giant will also invest in new business initiatives, acquisitions and strategic partnerships.

Besides this, the company will also be looking to further expand its international operations. The company has already marked its presence in Canada, Singapore, UAE, Malaysia, Tanzania, Uganda and Bangladesh.

Paytm has several monetisation engines running

Paytm has several monetisation engines running
Paytm

One 97 Communications largely has three montinisation engines running in its digital payments banner Paytm. These are — Payments, Commerce and Cloud Services, and Financial Services.

Payments is currently the biggest source of revenue for Paytm as well as the biggest source of customers. Payment and Financial services contribute to almost 80% of the revenue. As per the company’s RHP, the company’s payments and financial services revenue alone stood at ₹689 crore for Q1FY22.

Its lending vertical has started taking off as well, with 2.82 million loans disbursed in July to September 2022.

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Paytm’s financial health has been getting better over the years

Paytm’s financial health has been getting better over the years
BI India

One 97 Communications earned ₹3,186.8 crore in revenue in the financial year 2021, with loss touching ₹1,704 crore. The company spent ₹532 crore on marketing expenses and ₹1,916.8 crore as payment processing fees in the same time frame.

Paytm, in April to July quarter of 2021, reported a revenue of ₹948 crore. Its loss was at ₹381.9 crore.

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