One97 Communications, which operates under Paytm brand name, will come out with the country’s biggest initial public offer on November 8 in the price band of Rs 2,080-2,150 per share, implying a valuation of around Rs 1.48 lakh crore.
The Rs 18,300 crore-offer will be the biggest in the country after Coal India’s IPO (Initial Public Offer) back in 2010 wherein the state-owned had garnered Rs 15,200 crore.
In a pre-IPO conference on Thursday, One97 Communications Managing Director and CEO Vijay Shekhar Sharma said he has received personal messages from investors who want to invest for the first time in the country and asserted that “this is the age of India”.
The IPO — which will close for subscription on November 10 — comprises issuance of fresh equity shares worth Rs 8,300 crore and Offer for Sale (OFS) by existing shareholders to the tune of Rs 10,000 crore.
“The price band that is set at Rs 2,080 to Rs 2,150 per share implies an enterprise value of USD 19.3 to USD 19.9 billion,” Sudarshan Ramakrishna, Managing Director of Goldman Sachs India Securities said during the IPO presentation.
At current exchange rates, the enterprise value is in the range of Rs 1.44 lakh crore to Rs 1.48 lakh crore.
The company skipped pre-IPO funding round to expedite launch of the initial share sale.
“If we can say 2010-20 was for Asia at large, China and Japan and for other countries. 2020-30 is 100 per cent for India. This is the age of India. Whether you are a private company, young startup or potentially to list or a listed company. This is the time that the world is going to give you money,” Sharma said.
Through the OFS, Sharma will offload shares worth up to Rs 402.65 crore while Antfin (Netherlands) Holdings will sell shares to the tune of Rs 4,704.43 crore.
Besides, Alibaba.com Singapore E-Commerce will sell up to shares worth Rs 784.82 crore, Elevation CapitalV FII Holdings (Rs 75.02 crore), Elevation Capital V Ltd (Rs 64.01 crore), Saif III Mauritius (Rs 1,327.65 crore), Saif Partners (Rs 563.63 crore), SVF Partners (Rs 1,689.03 crore) and International Holdings (Rs 301.77 crore), as per the offer document.
“Interest has been tremendous from Indian as well as global blue chip investors from the time we filed the DRHP (Draft Red Herring Prospectus). We always had a very high quality share base that has benefited us,” Paytm President and Group CFO Madhur Deora said.
Paytm’s revenue from operations increased by 62 per cent to Rs 8,90.8 crore in the first quarter of financial year 2021-22. In the year-ago period, the same stood at Rs 5,512 crore.
In financial year 2021, the company reported a Gross Merchandise Value of Rs 4 lakh crore.
“We have quoted GMV as a number in the document which is consumer paying that means there is a commerce happening on our platform. We now have Rs 363 crore contribution profit. It is important to note that payment is a flywheel, monetisation is in payments and financial services. That’s our business model. Paytm as a brand is valued at Rs 47,000 crore,” Sharma said.
In the first quarter of FY’22, the company’s payments and financial services revenue alone stood at Rs 689.4 crore contributing to 77 per cent of its total revenue. The company incurred a loss of Rs 2.9 crore in the quarter ended June 2021.
Talking about growth potential, Sharma said there are around 40-50 crore smartphone users which is expected to double to around 90 crore in the next five years. This will increase the mobile payments segment to Rs 230 lakh crore from Rs 46 lakh crore at present, he added.
According to research firm Redseer, Paytm has mobile payments transaction volume market share of approximately 40 per cent, and wallet payments transaction market share of 65 70 per cent in India as of FY 2021.
As per the offer document, demonetisation in 2016 also played a role in pushing merchants to accept payments digitally and led to growth in products like QR and wallets. With several factors, including government initiatives and reforms, improving technology, increasing reach and awareness, digital payments are expected to more than double from USD 20 trillion in FY 2021 to USD 40-50 trillion by FY 2026.
