One 97 Communications Ltd was established in 2000. The company is currently India’s leading digital ecosystem, and it caters to both consumers and merchants. The company has a wide client base that includes 333 million consumers and another 21 million registered merchants. The company is engaged in offering Payment Services, Commerce and Financial Services, and Cloud Services. In this article, we take a closer look at the Paytm IPO Review and its possible future prospects.
In 2009, the company launched the “Paytm App.” It was the first mobile digital payment platform. The App offers a service of doing a cashless transaction. Over the years, the company has progressed; the company became India’s First Unicorn and the most valuable payment platform. The brand value of the company in 2020 was reported to be around $6.3 billion. The company first launched its App with an objective cashless transaction. Later on, it entered into the Business of Merchants, Day to today FMCG, Top-Up Mobile Phones, Online Account to Account, Wallet to Wallet Money Transfers, Access Digital Banking Services, Credit Cards, Debit Cards, Net Banking Services, Pay Bills, Purchase Tickets, Buy Insurance, Cloud and Software Services, Play Games Online, Investments in the form of Gold Bonds, Stock Market, Mutual Funds, Fixed deposits and many more. The company, through Paytm, created a super-app to provide different kinds of services and products to the customers and merchants. Due to their highly innovative IT, Digital support Paytm has established a Pan India presence for any solution related to payment, finance, and commerce.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the loans of the company, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE PAYTM IPO OFFER
- The ecosystem of the company them to have an advantage of various opportunities present in the market.
- The company believes it is a well-known and established brand with a huge size, market share, and presence.
- The company has in-depth knowledge regarding consumer spending and consumer pattern.
- The company has an advantage over their IT, Digital Support System, the Service, products they offer, and operation technology.
- The company has a strong distribution network, which helps them to attain long-term benefits.
- The company has an experienced, skilled, and highly innovative management, Employee staff, and a board of directors.
- The presence of ace investors in the company shareholders list gives confidence to other investors in their business operation.
PAYTM IPO DETAILS:
One 97 Communications Limited is the parent company of Paytm. The headquarters of One97 Communications is situated in Noida. Recently the company filled its DRHP to SEBI, and SEBI has given the company approval to float their IPO in the market. The company has brought the IPO is of Rs.18,300 Crores. Earlier, the company mentioned that the IPO would be Rs.16,600 Crores, but later, the IPO issue size increased to Rs.18,300 Crores. The IPO consists of fresh equity worth Rs.8,300 Crores and an OFS brought forward by the promoter and other selling shareholders worth & Rs.10,000 Crore. The company also stated that it would carry out a pre-IPO placement offer of Rs.2,000 Crore inclusive of the IPO offer. Check Day by Day IPO Subscription Details (Live Status)
Paytm’s IPO will become India’s Ever Largest IPO to float in the market. Before Paytm Coal, India’s IPO of Rs.15,200 Crore was the largest IPO of the Indian Equity Market. Through the OFS being brought in the IPO, Various investors will offload their equity in the company. These are:
| Ant Group | Rs.4,704.40 Crore |
| Alibaba | Rs.785 Crore |
| Japan’s SoftBank | Rs.1,689 Crore |
| SAIF III Mauritius Company | Rs. 1,327.60 Crore |
| Elevation Capital | Rs.2,030 Crore |
| Vijay Shekhar Sharma | Rs. 402 Crore |
The company also stated that the funds been raised from the IPO would be utilized for the following purposes:
| The Growth and strategy to strengthen the company’s ecosystem by acquiring and retaining merchants and consumers. It includes providing greater access to financial services and technology. | Rs. 4,300 Crores |
| Acquisitions, Strategic Partnerships along with the investment in the new business | Rs. 2,000 Crores |
| General Corporate Purpose | Rs. 2,000 Crores |
| IPO Opening Date | November 08, 2021 |
| IPO Closing Date | November 10, 2021 |
| Issue Type | Book Building Type |
| Face Value | Rs.1/ Equity Share |
| IPO Price | Rs.2,080 – Rs.2,150 / Equity Share |
| Market Lot | 1 lot of 6 Equity Shares |
| Minimum Amount | Rs.12,900 |
| Maximum Lot | 15 lot corresponding to 90 Equity Shares |
| Maximum Amount | Rs.193,500 |
| Listing At | BSE, NSE |
| Issue Size | Rs. 18300 Crore |
| Fresh Issue | Rs. 8300 Crore |
| Offer for Sale | Rs. 10,000 Crore |
| Basis of Allotment Date | November 15, 2021 |
| Initiation of Refunds | November 16, 2021 |
| Credit of Shares to Demat Account | November 17, 2021 |
| IPO Listing Date | November 18, 2021 |
| Basis of Allotment Type | % Of the IPO Offer |
| Qualified Institutional Buyer | 75 |
| Non-Institutional Investor | 15 |
| Retail | 10 |
FINANCIALS TRENDS OF PAYTM IPO:
- The company reported that its operating revenue in the first quarter of FY22 increased by 61% to Rs.890 Crore from Rs.551 Crore.
- During the same period, the company reported that its major revenue that accounts for 77% of its total revenue, is from payment and financial services.
- The company also stated that it reported a loss of Rs. Three hundred eighty-two crores in the first quarter of FY22.
- Currently, the company has a total user base of consumers up to 337 million and 21.8 million registered merchants.
| Particulars | For the year ended ( in Cr.) | ||||
| 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |||
| Total Assets | 9,151.30 | 10,303.10 | 8,766.80 | ||
| Total Revenue | 3,186.80 | 3,540.70 | 3,579.70 | ||
| Loss After Tax | 1,701 | 2,942.4 | 4,230.9 |
| PARAMETERS | MARCH 21 | MARCH 20 | YoY % |
| Core EBITDA Margin (%) | -62.96 | -80.15 | 21.46 |
| EBIT Margin (%) | -56.61 | -86.84 | 34.81 |
| Pre-Tax Margin (%) | -57.96 | -88.46 | 34.48 |
| PAT Margin (%) | -58.06 | -87.98 | 34.01 |
| Cash Profit Margin (%) | -51.69 | -82.66 | 37.47 |
| ROA (%) | -16.73 | -30.58 | 45.28 |
| ROE (%) | -23.48 | -43.61 | 46.15 |
| ROCE (%) | -20.61 | -38.54 | 46.52 |
| Asset Turnover(x) | 0.29 | 0.35 | -17.08 |
| Sales/Fixed Asset(x) | 1.97 | 2.72 | -27.62 |
| Working Capital/Sales(x) | 0.53 | 0.69 | -22.32 |
| Net Sales Growth (%) | -14.58 | 1.51 | -1065.95 |
| Core EBITDA Growth (%) | 41.77 | 41.28 | 1.19 |
| EBIT Growth (%) | 44.31 | 32.22 | 37.54 |
| PAT Growth (%) | 43.63 | 31.56 | 38.27 |
| EPS Growth (%) | 40.42 | 35.05 | 15.33 |
PRINCIPAL SHAREHOLDERS OF PAYTM IPO:
Paytm is a professionally Foreign Owned and Managed Company as it has no single identifiable promoters. Some of the investors managing the company are:
| Ant Group |
| Alibaba |
| Berkshire Hathaway |
| Ratan Tata Startup Trust |
| Japan’s SoftBank |
| SAIF III Mauritius Company |
| Elevation Capital |
| Vijay Shekhar Sharma |
STRENGTHS:
- Paytm was the company that started online and digital transaction platforms. The company’s planning was amazing since they began their business operation at a time when smartphones were getting popular in the country.
- The App has created an atmosphere of comfort to carry out a transaction at any time and anywhere.
- The company has a wide client base that includes 333 million consumers and another 21 million registered merchants. It has created a platform where shoppers can easily connect with the merchants irrespective of their financial foundation.
- Paytm has a well-diversified service and product portfolio. Paytm gives nearly all the types of services from household to shopping, from ticket booking to insurance. It has become a One App Solution Platform for digital commerce, finance, and transaction service.
- Paytm has held its client and expanded the client base by providing them ceaseless deals, offers, cashback, vouchers, and coupons.
- The company has a well-known and established brand set up with a huge size and market share.
- The App has great Brand Awareness amongst all the age groups, financial groups of the society.
- Online Payment Platforms like Paytm are the biggest beneficiary of the Digital India Drive and the Demonetization that was done in the past.
- Paytm has had strong Marketing Campaigns. These have increased brand awareness along with the use of the App in society.
- Paytm is a professionally Foreign Owned and Managed Company. The company has strong and renowned investors as its Stakeholders.
- The company has the largest as well as the biggest payments network in India. The company is the biggest in the country regarding the number of transactions, customers, and merchants registered with the firm.
- The company also reported the largest revenue among its peers from the last decade.
- The company has synthesized its core business operation to develop an ecosystem of all kinds of services.
- Paytm has a Pan India presence and is also present at the global level.
- It is the most valuable company engaged in the segment of digital and online payments. The company has a net worth of US$ 6.3 billion.
- Paytm provides its services in 11 different languages.
WEAKNESS:
- Paytm needs strong IT and Network foundations. The App is accessible at a good speed along with certain bandwidth. Though this is not an issue with major areas of the country in remote areas, Paytm accessibility is not available due to a lack of speed and bandwidth criteria. As a result, it needs to strengthen its IT and digital support system in those areas. Though Paytm is widely renowned, many users are unaware of its true potential; Paytm offers multiple Services and is a widely diversified platform.
- Another weakness to its business operation is the inborn dread of making a fraudulent transaction, fraudulent transaction, or any fraud by the merchant, which can hamper the brand awareness of Paytm.
- One of the major weaknesses of Paytm is its Poor Customer Service. The company has a huge client base. As a result, the customer support efficiency decreases. A general survey established that the Paytm Call Executives are generally rude to the customer’s query.
- Paytm is undoubtedly the biggest beneficiary of Digital Transactions nowadays, but plenty of Indians still feel safe doing cash transactions.
- Paytm has diversified so much that it needs strong management and highly skilled employee staff to properly execute the strategy to maintain its business operations. Paytm seems to be a perfect case of Overexpansion of the business operations.
OPPORTUNITIES OF PAYTM IPO:
- With developing innovation, comfort for people has become a prime objective. The Online Transaction platform has brought comfort. It has expanded the market reach along with the necessity of payment aggregators in India.
- Demonetization and Digital India Drive are other opportunities that Paytm can see to expand its business profile.
- As the number of working professionals increases, the Paytm business is expected to grow. These individuals will have less time for shopping or to avail the Service at the store itself. As a result, the need for online and digital platforms like Paytm will increase.
- Paytm can take into account a bigger crowd by setting up some facilities with an offline base.
- Paytm can carry out awareness programs for digital and cashless transactions. It will promote their client base and revenue operations.
- Paytm can also carry out awareness programs regarding the different kinds of services it offers; this will help it unlock value to its true potential.
THREATS:
- Paytm is engaged in a sector where it faces stiff competition. Many organized players after Paytm have come up, such as Google Pay, PhonePe, Amazon Pay, and many more.
- Some of the new start-ups like Mobikwik, Razorpay currently provide more lucrative deals to shift the client base of Paytm towards their platform. Many Telecom operators are also coming into this sector as Airtel has developed the Airtel Wallet and many more.
- Paytm is vulnerable to IT disruptions along with Cyber Security attacks.
- Paytm needs to ensure no disruption to their Huge Database, IT, and Digital Support System.
- There are additionally developing worries regarding how safe the data submitted to installment entryways are and the level to which such gateways or installments made through them are checked.
- Increased threat from the Banks, which have also established the Service for E-Wallets.
- The continuous effect of COVID-19 on consumer spending and consumer pattern has also affected the company’s business operation.
- The company has expanded its business operations; if they don’t effectively deal with the expansion, they might not execute their plans effectively.
- On a consolidated basis, the company is also vulnerable to the business inefficiency of its subsidiary companies and business.
- Paytm is still a loss-making company; it has also predicted that its operating expenditures will increase, affecting its profitability margins.
- Paytm is exposed to strict guidelines along with rules and regulations that it needs to follow.
- Paytm business will take a heavy blow if they cannot retain their customers and merchants associated with them.
- Paytm is heavily dependent on its payment services account business.
CONTACT DETAILS:
One 97 Communications Limited
First Floor, Devika Tower,
Nehru Place, New Delhi 110 019, India;
Tel: +91 11 2628 0280;
E-mail: compliance.officer@paytm.com
Website: www.paytm.com
REGISTRAR:
Link Intime India Private Limited
C-101, 247 Park, L.B.S. Marg, Vikhroli (West) Mumbai
400 083, Maharashtra
Tel: +91 022 4918 6200
E-mail: paytm.ipo@linkintime.co.in
Website: www.linkintime.co.in
LEAD MANAGER(S):
- Axis Capital Limited
- Morgan Stanley India Company Private Limited
- Goldman Sachs (India) Securities Private Limited
- ICICI Securities Limited
- J.P. Morgan India Private Limited
- Citigroup Global Markets India Private Limited
