Paytm IPO subscribed 18% on Day 1; Know GMP signals, shares offered & more

Said to be India's biggest public issue to date, Paytm's initial public offering (IPO) of Rs 18,300 crore opened for subscription on Monday. The three days sale which opened with the price band of Rs 2,080- 2,150 per share will conclude on November 10, Wednesday.

According to people dealing in the unlisted share of companies, Paytm was seen trading at a premium of Rs 60 over the IPO price and further was subscribed 18% at the end of Day 1. On Tuesday, its GMP slipped a bit and stood at Rs 58.

Apart from that, Paytm's retail investor portion was subscribed 78% as of 5 pm. Other portions reserved for institutional investors and non-institutional buyers were subscribed 6% and 2% respectively. 

Paytm issues fresh equity worth Rs 8,300 crore

Paytm's public issue comprises the issuance of fresh equity shares worth Rs 8,300 crore and an offer for sale (OFS) by existing shareholders of Rs 10,000 crore. Likely to become the country's largest IPO in history, it is expected to break the record held by Coal India Limited which had raised over Rs 15,000 crore in IPO. 

As mentioned earlier, the IPO will conclude the November 10, and the shares will be listed on 18 November 2021, at the Bombay Stock Exchange and National Stock Exchange. The IPO which has already received Rs 8,235 crore from its anchor investors is aiming to raise more. 

Paytm's expensive pricing 'justified'

As Paytm plans to use its IPO proceeding for further growth in business and acquiring new merchants and consumers, it already skipped its pre-IPO funding to prepare for the launch of the initial share sale. The company has successfully narrowed its losses by restricting branding expenses and now acquiring new merchants and customers will decide its further growth trajectory, Ravi Singhal, Vice Chairman, GCL Securities was quoted by Livemint as saying.  

DVP equity strategist at Angel One, Jyoti Roy, while recommending investors to subscribe to its IPO, was quoted by media houses as saying that the valuations were justified. "With expensive pricing, the Paytm IPO had a slow start and received a mixed response from analysts on Monday," Roy said.

The DVP equity strategist further said that valuations may appear to be expensive but Paytm has become synonymous with digital payments through mobile and has become a market leader in the mobile payment space. Thus, she added, it is well-positioned to benefit from the exponential growth in mobile payments between the 2021 and 2026 fiscal years.  

More about Paytm

At the upper end of the price band, Paytm is valued at 49.7 times FY21 revenues. However, it also had negative cash flows for the last three fiscals. It posted a loss of Rs 1,701 crore on a revenue of Rs 2,802 crore in FY21, PTI reported. Notably, Paytm would hope to capitalise on India's rapidly growing fintech segment. Union Minister of State for Finance Bhagwat K Karad had said in September that India's fintech sector is likely to triple to Rs 6,20,700 crore in value terms by 2025.  

One97 Communication which operates under the brand name of Paytm was incorporated in 2000 and has become the leading digital platform for consumers and merchants in India providing a range of services including payment services, financial services, cloud services, and others. The company has a GMV of Rs 4 lakh crore in the current fiscal year. 

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