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Paytm IPO: GMP, other details as issue opens for subscription next week

A smartphone with the Paytm logo is placed on a laptop in this illustration (REUTERS)

2 min read . Updated: 03 Nov 2021, 11:04 AM IST Livemint

Paytm IPO comprises issuance of fresh equity shares worth ₹8,300 crore and OFS by existing shareholders

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Paytm's parent One97 Communications will come out with its initial public offering (IPO) next week on Monday, November 8 with the price band fixed at ₹2,080-2,150 per share, implying a valuation of around ₹1.48 lakh crore. The three-day share sale will conclude on November 10.

As per market observers, Paytm shares are available at a premium (GMP) of ₹135 in the grey market today. The grey market is an unofficial platform, wherein trading starts after the announcement of IPO price band till the listing of the shares.

“On the financial front, Paytm has posted revenue of ₹2,802 crore while posted loss of ₹1,701 crore in FY21. Revenue growth does not seem to be exciting. Company has narrowed its losses mostly by constricting its marketing and advertising expenses. Amongst all the startups, Paytm is an ideal example of well diversified businesses but lacks clear leadership in almost all the segments," said Abhay Doshi, founder, UnlistedArena.com.

The IPO 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. The ₹18,300 crore-offer will be the biggest in the country after Coal India's issue back in 2010 wherein the state-owned had garnered ₹15,200 crore.

“At upper band, Post issue, sales to market cap comes around 49x which makes the issue expensive. Apart from valuations, I believe 'its road to profitability' is more challenging," added Doshi.

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.

The company 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.

Brokerage firm ICICI Securities has laid out extremely competitive markets with continuously evolving technology, failure to attract merchants & volumes can adversely affect business, dependency on payment services for majority of revenue as key risk & concerns.

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