Paytm's Rs 18,300 crore IPO subscribed 18% on Day-1

The country’s largest initial public offering (IPO) by Paytm parent One97 Communications was subscribed nearly 18 per cent at 5 pm on Monday — the first day of the issue. The digital payment major’s IPO is looking to mobilise Rs 18,300 crore. Paytm has already allotted shares worth Rs 8,235 crore to anchor investors. Singapore’s GIC, Canada Pension Plan Investment Board, BlackRock, and Abu Dhabi Investment Authority are among those that have got allotment in the anchor category.

The IPO comprises a fresh fund-raise of Rs 8,300 crore and a secondary share sale of Rs 10,000 crore. The price band for the IPO is Rs 2,080-2,150 per share. At the top-end, Paytm will be valued at Rs 1.39 trillion. Paytm had 337 million registered consumers and over 21.8 million registered merchants as of June 30, 2021. Its gross merchandise value (GMV) increased from Rs 697 billion in the three months ended June 30, 2020, to Rs 1,469 billion in the three months ended June 30, 2021.

“The IPO is valued at 43.7x 2020-21 (FY21) price-to-sales and 36.7x 2021-22 annualised price-to-sales, which is at a discount of 12 per cent to the recently-listed Zomato,” said a note by Reliance Securities.

“While there is no listed peer available for Paytm in the domestic market, we believe high valuations for unicorns like Paytm — that have created significant scale and brand equity — are likely to sustain. Further, a strong 33 per cent compound annual growth rate (CAGR) in GMV over FY19-FY21, despite the pandemic, vindicates Paytm’s leadership and brand value. This, along with 17 per cent estimated CAGR in digital payments in value to $40 trillion during FY21-FY26E, indicates sustainable growth in the long run. Hence, we recommend ‘subscribe’ for the long-term perspective,” the note added.

Some brokerages like Marwadi Financial Services have sounded caution. 

“Considering the trailing 12-month (June 2021) sales of Rs 3,142 crore on post-issue basis, the company is going to list at a market capitalisation-to-sales of 44.36x,” it observed, adding “valuations are demanding for a loss-making company”.