Paytm (One97 Communications Ltd) IPO | Swastika Blog - Share Market Updates, Latest News and Expert's Tips | Swastika Investmart Ltd (Swastika Investmart) Swastika

Paytm (One97 Communications Ltd) IPO

Incorporated in 2000, One97 Communications Limited (‚Paytm‛) is India’s leading digital ecosystem for consumers and merchants. Paytm
offers ‘Payment Services’, ‘Commerce and Cloud Services’, and ‘Financial Services’ to 33.3 crore consumers and over 2.18 crore
merchants registered with them, as of June 30, 2021. Their 2-sided (consumer and merchant) ecosystem enables commerce, and provides
access to financial services, by leveraging technology to improve the lives of their consumers and help their merchants grow their businesses.

In 2009, the company launched the first digital mobile payment platform, “Paytm App” to offer cashless payment services to customers and now, it became India’s largest payment platform and the most valuable payments brand with a total brand value of US$6.3 billion as per Kantar BrandZ India 2020 Report.

The app enables customers to do cashless transactions at stores, top-up mobile phones, online money transfers, pay bills, access
digital banking services, purchase tickets, play games online, buy insurance, make investments, and more. However, merchants can
use the platform for advertising, online payment solutions, offering products to customers, and loyalty solutions. They have created a payments-led super-app, through which they offer their consumers innovative and intuitive digital products and services. They offer their consumers a wide selection of payment options on the Paytm app, which includes:

  1. Paytm Payment Instruments, which allow them to use digital wallets, sub-wallets,
    bank accounts, buy-now-pay-later, and wealth management
    accounts; and
  2. Major third-party instruments, such as Debit and Credit Cards and Net Banking.

Offer services such as Paytm Wallet, Paytm QR, Paytm Soundbox, Gold investments, and Fixed Deposit, Paytm Postpaid, Merchant
Cash Advance and FASTag.

Outlook & Valuation

The revenues of the company have been on the declining side, in FY19 revenue was at ₹3,579 cr while in FY21 it was at ₹3,186 cr. Also, it is a loss-making company with a loss of ₹(4,230.9) cr in FY19 which however reduced to ₹(1,701) cr in FY21.

We are in an era of new-age businesses where we have seen many unicorns getting listed recently. It is really arduous to provide a valuation for such types of companies. We expect only leaders will survive over a period of time and only a few such companies will be
wealth creators while many can be wealth destroyers. As India is on the verge of digitalization, we may expect the company to get benefited
from the same also new acquisition and strengthening of the PAYTM ecosystem from the IPO will be beneficial for the company. Thus we
assign a “SUBSCRIBE” rating only for aggressive investors.

Paytm IPO Details

KEY MANAGERIAL PERSONNEL

  • Vijay Shekhar Sharma is the Founder, Managing Director, and Chief Executive Officer of the company, and the Chairman of the Board. He oversees the Company’s key strategic efforts including engineering, design, and marketing.
  • Madhur Deora is the President and Group Chief Financial Officer of the company. He has been associated with the company since October 3, 2016.
  • Manmeet Singh Dhody is the Chief Technology Officer, Payments. He has been associated with the company since April 1, 2020.
  • Vikas Garg is the Chief Financial Officer of the company. He has been associated with the company since May 21, 2014, and was previously associated with the company from August 25, 2008, to September 28, 2012.
  • Sudhanshu Gupta is the Chief Operating Officer of Paytm First Games Pvt Ltd, their Subsidiary. He has been associated with Paytm First Games Pvt Ltd since June 1, 2018.
  • Bhavesh Gupta is the Chief Executive Officer of the Lending Business of the company. He has been associated with the company since August 4, 2020.
  • Renu Satti is the Chief Operating Officer of Offline Payments of the company. She has been associated with the company since October 11, 2006.
  • Praveen Kumar Sharma is the Managing Director and Chief Executive Officer of Paytm Payments Services Ltd. He has been associated with the company since September 2, 2019.
  • Harinderpal Singh Takhar is the Chief Executive Officer of Paytm Labs Inc, their Subsidiary. He has been associated with Paytm Labs Inc. since June 2013.

COMPETITIVE STRENGTHS

  • India’s leading digital payment service platform.
  • Strong brand identity with a brand value of US$6.3 billion.
  • Large customer base with 333 million total customers, 114 million annual transacting users, and 21 million registered merchants.
  • Paytm Super-app to access a wide range of digital payment services over mobile phones.
  • Strong macro tailwinds.
  • Increasing pace of digitization.
  • Digital payments in India evolving rapidly
  • Under-penetration and rising digitization of financial services

KEY CONCERNS

  • They have a history of net losses and we may not be able to achieve profitability.
  • The ongoing COVID-19 pandemic and measures intended to prevent its spread have had, and may continue to have, a material and adverse effect on the business and results of operations.
  • The company may suffer if they are unable to retain existing customers, acquire new customers, grow the amount of consumer transactions, or increase in the client acquisition expenses.
  • Their payment services account for the majority of their income. Their attempts to broaden their service offerings and market reach may not be successful, which might have a negative impact on their income.
  • The business might suffer if they do not maintain or develop their technological infrastructure.

 

COMPARISON WITH LISTED INDUSTRY PEERS

There are no listed companies in India that engage in a business similar to that of the Company. Accordingly, it is not possible to
provide an industry comparison in relation to the Company

PayTm IPO Financials

 

DISCLAIMER:
The information contained herein are strictly confidential and are meant solely for the information of the recipient and shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written permission of Swastika Investmart Ltd. (‚SIL‛). The contents of this document are for information purpose only. This document is not an investment advice and must not alone be taken as the basis for an investment decision. Before taking any decision to invest, the recipient of this document must read carefully the Red Herring Prospectus (‚RHP‛) issued to know the details of IPO and various risks and uncertainties associated with the investment in the IPO of the Company. All recipients of this document must before acting on the given information/details, make their own investigation and apply independent judgment based on their specific investment objectives and financial position. They can also seek appropriate professional advice from their own legal and tax consultants, advisors, etc. to understand the risks and investment considerations arising from such investment. The investor should possess appropriate resources to analyze such investment and the suitability of such investment to such investor’s particular circumstances before making any decisions on the investment. The Investor shall be solely responsible for any action taken based on this document. SIL shall not be liable for any direct or indirect losses arising from the use of the information contained in this document and accept no responsibility for statements made otherwise issued or any other source of information received by the investor and the investor would be doing so at his/her/its own risk. The information contained in this document should not be construed as forecast or promise or guarantee or
assurance of any kind. The investors are not being offered any assurance or guaranteed or fixed returns on their investments. The users of this document must bear in mind that past performances if any, are not indicative of future results. The actual returns on investment may be materially different than the past. Investments in Securities market products and instruments including in the IPO of the Company are highly risky and they are generally not an appropriate avenue for someone with limited resources/ limited investment and low risk tolerance. Such Investments are subject to market risks including, without limitation, price, volatility and liquidity and capital risks. Therefore, the users of this document must carefully consider all the information given in the RHP including the risks factors before making any investment in the Equity Shares of the Company.

Swastika Investmart Ltd or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither Swastika Investmart Ltd nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Swastika Investment Ltd may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the Subject Company or third party in connection with the Research Report.

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