The mega Paytm IPO kicked off on Monday with retail investors subscribing to 78 per cent of their quota.
One97 Communications, the parent of Paytm, plans to raise a mammoth Rs 18,300 crore through the initial public offer, which is India’s largest since Coal India’s Rs15,000-crore offer in 2010. The issue is remain open till November 10.
The IPO is expected to value One97 Communications at $20 billion (about Rs 1.5 lakh crore). At that level, it will rank around 30th in terms of market capitalisation of all stocks trading on the National Stock Exchange — just below Tata Steel and Tech Mahindra but above Adani Ports and Special Economic Zone Ltd.
Paytm founder and CEO Vijay Shekhar Sharma was at the Tirupati temple on Monday. He later tweeted a picture of the visit. Sharma is expected to receive a little over Rs 400 crore by selling a part of his holding in the company.
The overall subscription stood at 18 per cent on the first day as the other two categories got off to a slow start. The offer includes a fresh issue of primary shares worth Rs 8,300 crore and an offer for sale (OFS) by existing shareholders of Rs 10,000 crore, which includes Ant Financial, Alibaba and Softbank.
Japan’s Softbank has slipped into the red in the July-September quarter on account of its losses in China.
The likely listing date of the shares is November 18. The IPO comes in at a price band of Rs 2,085-2,150 per share. Market circles expect the interest from institutional investors and high net-worth individuals to grow in the next two days. Foreign portfolio investors are also expected to join the queue.
According to Anindya Banerjee, deputy vice-president, currency derivatives & interest rate derivatives, Kotak Securities Ltd, the rise of the rupee against the dollar can be attributed to FPI investment in Paytm.
There has been a mixed reaction among analysts to the IPO. Marwadi Shares and Finance Ltd estimates the company will list at a market market capitalisation of Rs 1.4 lakh crore. “There are no listed companies in India whose business is comparable with that of the company’s business. We assign an avoid rating to this IPO as valuations are demanding for a loss-making company,” the brokerage added.
Vikas Jain, senior research analyst at Reliance Securities, said though Paytm has no listed peers, it has created significant scale and has strong brand equity, which should lead to sustained valuations in the future.
``A strong 33 per cent compounded annual growth rate (CAGR) in gross merchandise value (GMV) over 2018-19 to 2020-21, 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 the financial year ending March 31, 2021 to 2025-26 indicates a sustainable growth in the long run,’’ Jain said while recommending a subscribe rating for the long-term perspective.
Some other brokerages like Arihant Capital have also recommended a subscribe rating for listing gains.
