4 Min Read | June 14, 2021
Investors, be ready, India’s biggest IPO to date will float in the market pretty soon!
As quoted by Moneycontrol, ”One97 Communications that owns and operates mobile payments firm Paytm has finally made its decision to go public. In a letter addressed to its stakeholders and employees having stock options, the company has said it has received in-principle approval from its board to go for an initial public offering.”
The investor in you is most satisfied when you get to invest in a company whose products or services are used by you. It’s like owning a piece of that company or business.
Do you agree, Convey Warriors?
The online payment firm Paytm is one such company that has become a household name in India. So, you certainly can fathom the stardom Paytm IPO would lure when it goes live!
But, hold on!
As an informed investor, you must know the financials and other details of the company you are planning to invest in. In order to facilitate the same, we have compiled the necessary Paytm IPO details and its financials.
Read, Analyse and plan to Invest!
I know most of you are aware of the services offered by Paytm and how to use them but before we hop on to the IPO details let us get sorted with the knowledge about the Paytm Group.
Paytm was founded in the year 2010 by one of the most popular Indian entrepreneurs, Vijay Shekhar Sharma. It is owned by One97 Communications Limited and is one of the leading fintech firms offering online payment services, financial solutions to consumers and offline merchants. For those who do not know, the term ‘Paytm’ is an abbreviation of ‘Pay through mobile.’
The launch of Paytm is regarded as a renaissance in the digital payment space of India and the prime focus of the company lies in bringing the Indian consumers into the mainstream economy by enabling online payments, e-commerce and banking services, etc.
Some of the prominent investors include Softbank, Ant Financials, AGH Holdings, SAIF Partners, Berkshire Hathaway, T Rowe Price and Discovery Capital.
Paytm Payments Bank (owned by One97 and Paytm) has over 58 million customers on board.
Paytm Money, a wholly-owned subsidiary of Paytm became one of the biggest investment platforms (in India) within its first year of launch. Further, it makes the largest contribution of Systematic Investment Plans (SIPs) to the Mutual Fund Industry.
Paytm First Games, a joint venture of One 97 Communications and AG Tech Holdings has garnered attention in the gaming market.
Paytm Insurance, again a wholly-owned subsidiary of One 97 Communications has already gained a brokerage license from IRDA.
If you want to know more about how Paytm started and the thrilling entrepreneurial journey of Vijay Shekhar Sharma, click here.
Now that you have a gist about what Paytm does, let us through some light on the financial performance.
Graphical representation of financials helps you to have a better understanding of how a company is performing. Right?
So, here are some graphs depicting the performance of Paytm in the past few fiscal years.
In order to get ready for a public listing, the fintech giant has cut down its losses.
In FY20 the consolidated revenue did not increase as compared to FY19. The company chopped its spending on cashback, promotion and discounts to cut its losses (by 30%). But, this step impacted the growth of revenue.
Although the revenue was impacted due to the outbreak of Covid in FY20, the strong recovery in the first half of FY21 acted as compensation.
Lastly, the company has applied for a licence of both an insurance and NBFC (non-banking financial company) but neither the RBI nor the IRDA has approved the proposal.
The process of IPO is more than just raising money. In a nutshell, it invites the public to scrutinize quarterly and annual financial reports. This goes without saying that after a successful IPO the market reputation of a company rises and a degree of legitimacy gets associated with it (because it gets listed on the stock exchanges which are regulated by SEBI).
For those who are unaware, this is the first time that Paytm’s Vijay Shekhar Sharma is planning an IPO. Almost 10 years ago, in 2010, One97 Communications filed a DRHP with SEBI and aimed to raise a sum of Rs 120 crores. Unfortunately, it did not proceed with the plan as the company found the market to be very volatile at the time.
Nonetheless, come 2021!
As of now, the board members have given their thumbs up for launching the IPO and it is expected to surface on the market in the third quarter of the current fiscal year. Further, the company is also under the process of finalizing the draft red herring prospectus (DRHP) and it might file the DRHP by next month.
It is too early to know about the IPO details of Paytm but as reported by Financial Express, the company is aiming to raise an amount of Rs 21,800 crores by going public in the upcoming months. The current estimation of Paytm’s valuation is $16 Billion. Having said this, it is targeting to attain a valuation of $25-$30 billion after the IPO.
Although attaining such a high valuation would be challenging because Paytm still is a loss-making firm and at the same time it faces tough competition from other market players such as PhonePe, Google Pay, Amazon Pay.
One of the most striking features of Paytm IPO is its size!
If everything went well with the IPO launch, it would become the largest IPO to date in India. Until now, the largest IPO of the country was launched by Coal India back in the year 2010 with an IPO size of Rs 15,200 crores.
Dear readers, we will keep you posted with the rest of the intricate IPO details as and when the official announcements are made!
Well, Paytm is not listed in the stock market but since the talks of its IPO has begun a different craze has been noted in the grey market.
Note: Grey market is a market where the stocks are bought or sold even before they are listed on any stock exchange. The term ‘grey’ implies it is unregulated. To know more about the grey market or unlisted shares, click here.
The shares of Paytm were available at relatively low prices in the grey market. But a week after the IPO news surfaced, the demand (of the Paytm shares) accelerated amongst the investors.
As reported by Livemint, “Since the announcement of its initial public offering (IPO), the Paytm stock has been in great demand in the grey market. Over the past four days, the stock price has risen to Rs 21,000 from Rs 11,500. Investors remain willing to pay a premium on current prices, but no one is selling now.”
So, Convey Reader, what are your views on the upcoming IPO of Paytm. Do you think it would be able to attain a $25-$30 billion valuation post the public issue?
Do let us know your views in the comment section below and keep investing!
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