Paytm eyes up to $20-billion valuation in biggest India IPO
Shares in the Paytm IPO will be offered in a price band of Rs 2,080-2,150 apiece, implying a valuation of around Rs 1.48 lakh crore (about $20 billion) The Rs 18,300-crore offer will be the biggest since Coal India Ltd.’s IPO in 2010 wherein the state-run company 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 an offer for sale 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 $19.3 billion to $19.9 billion,” Sudarshan Ramakrishna, MD of Goldman Sachs India Securities, said during the IPO presentation. At the current exchange rates, the enterprise value is in the range of Rs 1.44 lakh crore to Rs 1.48 lakh crore.
The firm skipped a pre-IPO funding round to expedite the launch of the initial share sale.
“If we can say 2010-20 was for Asia at large, China and Japan and for other countries, then 2020-30 is 100% for India. This is the age of India,” Sharma said. “Whether you are a private firm, young startup or potentially to list or a listed company. This is the time that the world is going to give you money.”
Sharma will offload stock worth up to Rs 402.65 crore while Antfin (Netherlands) Holdings will sell shares to the tune of Rs 4,704.43 crore in the offer-for-sale. Besides, Alibaba.com Singapore E-Commerce will sell shares worth up to Rs 784.82 crore, Elevation Capital V 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), according to 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 62% year-on-year to Rs 890.8 crore in the first quarter of 2021-22. In FY21, 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,” Sharma said. “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,” he added.
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% 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%, and wallet payments transaction market share of 65-70% in India as of FY21.
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 $20 trillion in FY21 to $40-50 trillion by FY26.