2 min read.Updated: 10 Nov 2021, 03:37 PM ISTLivemint
Paytm IPO comprises issuance of fresh equity shares worth ₹8,300 crore and OFS of ₹10,000 crore by existing shareholders
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In what is expected to be India's biggest public issue, Paytm's ₹18,300 crore initial public offering (IPO) by parent One97 Communications opened for subscription on Monday. The price band of the three-day share sale, which concludes on November 10, has been fixed at ₹2,080-2,150 per share. Paytm has raised ₹8,235 crore from anchor investors ahead of its share sale.
As of 3:30 pm on Day 3 of the bidding, Paytm IPO has been fully subscribed at 1.51x with retail portion booked 1.62 times, BSE data showed. Non Institutional Investors (NIIs) bid 0.20 times whereas Qualified Institutional Buyers (QIBs) 2.13 times.
The public issue comprises issuance of fresh equity shares worth ₹8,300 crore and Offer for Sale (OFS) by existing shareholders to the tune of ₹10,000 crore. Paytm's IPO is likely to be the biggest in the country's corporate history, breaking a record held by Coal India Ltd, which raised over ₹15,000 crore more than a decade earlier.
As per market observers, Paytm shares premium has slipped in the grey market, and commanding a GMP of around ₹45. The shares of the company are expected to list on leading stock exchanges BSE and NSE on November 18, 2021.
“While valuations may appear to be expensive, Paytm has become synonymous with digital payments through mobile and is the market leader in the mobile payment space. Patym is well positioned to benefit from the exponential 5x growth in mobile payments between FY2021 – FY2026 and hence believe that the valuations are justified. We recommend investors to SUBSCRIBE to the issue," said Jyoti Roy - DVP- Equity Strategist, Angel One.
Paytm plans to use proceeds of the fresh issue to grow its business lines and acquire new merchants and customers. The company skipped pre-IPO funding round to expedite launch of the initial share sale.
The growth shown by the revenue and loss ratio of Paytm doesn’t seem to be excited. However, company is being successful in narrowing its losses by restricting the branding expenses. Acquiring new merchants and customers will decide the further growth trajectory. The dependency of Paytm on payment services for majority of revenue is a key matter of concern. Keeping in view of overall business model, we advice investors to subscribe the issue," said Ravi Singhal, Vice Chairman, GCL Securities.
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 around ₹4 lakh crore in FY21. 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.
Analysts at Choice Broking have recommended to subscribe for long term on the back of large market opportunities, product and technology DNA, leadership and culture. Though, the brokerage sees fast changing technological and services landscape in the payment services domain, revenue concentration risk, declining operational efficiencies and continued higher losses as key risks and concerns.