India’s leading digital payments and financial services platform Paytm’s IPO has now been fully subscribed on Day 3 of its bidding. The company is now set to be listed as India’s largest stock market debut.
As per data available on the exchange at 1.47 PM, Paytm IPO has been subscribed 1.33 times so far, with the QIB tranche being 1.88x subscribed. A total of 6,41,16,546 Paytm shares have been bid for as opposed to the 4,83,89,422 shares available. Earlier, on Day 1, Paytm’s IPO had secured the highest ever retail percent subscription for IPOs with retail sizes over Rs 1,000 crore, over the last decade, which was subsequently oversubscribed early on Day 2.
Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies) have also placed their bids on Day 3.
As expected, QIBs have placed their orders on the final day of the IPO bid/offer.
Analysts too are placing their bets on the IPO. Analysts at Canara Bank Securities said “Subscribe for the long term” for the Paytm IPO. “It is India’s leading digital ecosystem for consumers and merchants. It offers payment, commerce, cloud, and financial services through its payment app. The high penetration in internet and smartphone users has supported the company to grow at a faster pace due to attractive user interface by Paytm app,” said the analysts.
Paytm, which started as a mobile wallet in 2009, has gone on to add many more businesses — Paytm Payments Bank, Paytm Payments Gateway, Paytm Payout, Paytm Money, Paytm Insider, Paytm Insurance, Paytm Postpaid (Buy Now Pay Later), Paytm for Business, Paytm Credit Cards, Paytm First Games along with utility bill payments, offline merchant payments, rental payments, content and much more.
The company has seen a huge uptick in its revenues driven by its payments and financial services offerings. The company’s revenue is up by 46 per cent to Rs 9,480 million in Q1FY22, from Rs 6,494 million in Q1FY21. It is on the path to profitability as the company has already reported contribution margin profits.
And that’s also another factor that’s impressing analysts. Analysts at Reliance Securities said “Subscribe for long term” for the Paytm IPO as the company has shown great business strength despite the COVID-19 pandemic. “A strong 33 per cent 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 a sustainable growth in the long run,” said a report from Reliance Securities.
The analysts at Reliance Securities also defended Paytm’s valuation of $20 billion as it “has created significant scale and brand equity that are likely to sustain”.
“Given that the company’s ecosystem allows it to address large market opportunities, scale and reach, product, technology and leadership - We give this IPO a "Subscribe (Long-Term)" rating,” said analysts from Anand Rathi. Analysts from the leading financial and investment advisory also listed Paytm’s ecosystem, trusted brand and scale, the company’s insights of Indian consumers and merchants, its technology DNA, leadership and culture as well as the network effect it creates as its strengths.
Paytm has also grown to be a financial services giant, which brings with it more opportunities. Paytm’s payments and financial services alone contribute to almost 80 per cent of its revenue.
“In addition, the app users can avail Banking as well as Non-Banking financial services on the mobile application. The company has market share of approximately 40% in the overall payments transaction volume, and 65 per cent – 70 per cent market share of wallet payments transactions in India as of FY 2021. The company exhibits substantial growth in its user base and GMV since its inception within the Fin-tech sector. Moreover, the business is scalable due to the high convenience of digital banking,” said analysts from Canara Bank Securities.
Paytm had closed India’s largest anchor round on November 3 as it raised Rs 8,235 crore. Blue-chip global investors and tech-focussed funds have made their first-ever investment in Indian public markets through the Paytm IPO while investment giants like Blackrock, CPPIB and GIC have made their largest bets in an Indian IPO. The company has also attracted the world’s top pension funds, superannuation funds as well as sovereign wealth funds like Government of Singapore, CPPIB, ADIA, APG, City of New York, Texas Teachers Retirement, NPS Japan, University of Texas, NTUC Pension out of Singapore, University of Cambridge. The largest Emerging Markets dedicated investors like Standard Life Aberdeen, UBS, RWC have also taken part in Paytm’s anchor round.
The company opened for bid/offer on November 8 and it will stay open till November 10. The price band for the Paytm IPO has been kept in the range of Rs 2,080-2,150, as Paytm targets a $20 billion valuation. The company is set to raise Rs 18,300 crore from the markets through a fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore.