Paytm IPO: The IPO of One97 Communications, the parent company of digital payment company Paytm, opened for subscription today on November 8. Under the bidding process, the country’s largest IPO received only 18 per cent applications on the first day. Under this IPO, the company has offered 4.83 crore shares, out of which bids were received for only 88.23 lakh equity shares on the first day. Of the portion reserved for retail investors, about 78 per cent purchases have taken place. On the other hand, bids have been received for only two per cent of the shares in the portion reserved for non-institutional investors. Qualified Institutional Buyers (QIBs) bid for 16.78 lakh shares against 2.63 crore shares reserved for them. In this way it is subscribed only 6 percent. Compared to Paytm, the IPO of Nykaa and Zomato got a strong response from investors on the very first day. Although the size of their IPO was much smaller than that of Paytm.
Experts opinion
Analysts say that Paytm is going to open a large amount of Foreign Direct Investment (FDI) in India. Rajesh Singla, Founder and CEO of PreIPO consulting firm Planify Consultancy, told Financial Express Online, “This is very good for the Indian economy as it is going to set a benchmark for new investments.” Singla said that the world of digital payments has progressed very fast. Such is the effect of digital payments in India that other countries (10-23 countries) will start accepting payments through UPI by next year. This is going to be beneficial for the Indian rupee. He said, “We think Paytm is coming at fair valuation and people who didn’t get Nykaa IPO IPO will apply for Paytm when the money comes in.”
Paytm IPO: Whether or not to invest money in Paytm’s record IPO, this is the opinion of the expert; Check all the details related to the issue here
Paytm IPO: What should investors do?
- Analysts said that despite being one of the early entrants in the digital payments and fintech space, Paytm is facing a tough competition from its other competitors like Google Pay.
- Pavitra Shetty, Co-Founder and Trainer, Tips2Trades told Financial Express Online, “From IPO valuation perspective, Paytm’s entry into other verticals like insurance, broking will give better financial results in future but the current valuations are very expensive. Investors should book profits on the listing and wait for at least a fall of around 15-20%.”
- According to Reliance Securities, Paytm’s IPO is valued at 43.7 times FY21 sales and 36.7 times FY22 estimated sales, which is a 12 per cent discount to the recently listed Unicorn Zomato.
- Despite the pandemic, Paytm’s Gross Merchantise Value grew at a CAGR of 33 per cent (Compound Annual Growth Rate) between FY19-21 and its digital payments business grew at a CAGR of 17 per cent in value terms between FY21-26 estimate of. Based on this, Vikas Jain, Senior Research Analyst, Reliance Securities, has advised investors to subscribe to Paytm’s IPO for the long term.
(Article: Surbhi Jain)
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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