Paytm IPO details – Date, Price, Size, Allotment Status, Subscription

IPO-Note	One 97 Communications Limited
Rs 2080 – Rs 2150 per Equity share	Recommendation: Listing Gain

Company Profile: –

One97 Communications Limited (“Paytm”) is India’s leading digital ecosystem for consumers and merchants. They offer payment services, commerce and cloud services, and financial services to 33.7 crore consumers and over 2.18 crore merchants registered with them, as of June 30, 2021. For payment services, it primarily generates revenues from (i) the transaction fee that it charges from merchants based on a percentage of GMV (total payments made to merchants through transactions on its app), (ii) consumer convenience fees that it charges from consumers for certain types of transactions which includes services such as top up of balances of prepaid mobile, DTH, Paytm Wallet, payments for utility bills including electricity, cooking gas, water, mobile and broadband etc. and, (iii) recurring subscription fees from merchants for certain products and services, such as Paytm Soundbox and POS.

Financial services offerings include Mobile Banking Services through Paytm Payments Bank, Lending, Insurance and Attachment Products and Wealth Management. Commerce and cloud services offerings inlcudes a lifestyle destination for consumers to avail lifestyle commerce services such as ticketing, travel, entertainment, gaming, food delivery, ride hailing and more.

Paytm IPO- Details

Issue Details
Objects of the issue	·Growing and strengthening Paytm ecosystem, including through acquisition and retention of consumers and merchants and providing them with greater access to technology and financial services ·Investing in new business initiatives, acquisitions and strategic partnerships ·General corporate purposes
Issue Size	Total issue Size -Rs. 18300 Cr. Offer for Sale – Rs. 10000 Cr. Fresh Issue – Rs. 8300 Cr
Face value	Rs.1.00 Per Equity Share
Issue Price	Rs. 2080 – Rs. 2150
Bid Lot	6 shares
Listing at	BSE, NSE
Issue Opens:	8th Nov, 2021 – 10th Nov, 2021
QIB	75% of Net Issue Offer
Retail	10% of Net Issue Offer
NIB	15% of Net Issue Offer

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Paytm IPO Financial Performance:

Paytm IPO Shareholding Pattern:

Shareholding Pattern	Pre- Issue	Post Issue
Promoters & Promoter Group	0.00%	0.00%
Public (Founder and Investor)	71.26%	59.85%
Public (Other)	28.74%	40.15%

Source: RHP, EWL Research

Paytm IPO Strengths:

• India’s leading digital payment service platform.

• Strong brand identity with a brand value of US$6.3 billion.

• Large customer base with 333 million total customers, 114 million annual transacting users, and 21 million registered merchants.

Paytm IPO Key Highlights:

• Revenue from operations declined at a CAGR of 24.8% between FY19-FY21.

• Revenue from payment and financial services accounted 78.0% of revenue from operations.

• GMV has increased from Rs. 229 Crore in FY19 to Rs.403 Crore in FY21. (33% compound annual growth rate over FY19–21)

• As of June 30, 2021, Paytm Payments Banks had 6.54 cr. savings accounts.

• Professionally managed company with no identifiable promoters.

Paytm IPO Risk Factors:

• It may not be able to achieve profitability in the near term and as its operating expenses will keep rising resultantly it may increase its losses going forward.

• Had negative cash flows from operating activities for FY18, FY20 and FY21

• Extremely competitive markets with continuously evolving technology

Outlook:

One97 Communications launched Paytm in 2009, as a “mobile-first” digital payments platform to enable cashless payments for Indians; giving them the power to make payments from their mobile phones. Starting with bill payments and mobile top-ups as the first use cases, and Paytm Wallet as the first Paytm Payment Instrument, they have built the largest payments platform in India based on the number of consumers, number of merchants, number of transactions and revenue as of March 31, 2021. It has an overall mobile payments transaction volume market share of approximately 40%, and wallet payments transaction market share of 65% – 70% in India as of FY21, according to RedSeer. No doubt the company is a mega player in the digital ecosystem segment, but it has been incurring losses for last three financial years and may remain in red in the near term too as per RHP. At the higher price band of Rs 2150, the offer is priced at a P/BV of 20.67 based on its NAV of Rs. 104 as of June 30, 2021. We recommend Listing Gain to the IPO considering the risk factors.

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