Investing in new business initiatives, acquisitions, and strategic partnerships - 2,000cr, and for the general corporate purpose, another Rs 2,000cr will be deployed. The company intends to use the proceeds to grow and strengthen Paytm ecosystem, including through acquisition and retention of consumers and merchants and providing them with greater access to technology and financial services for Rs 4,300cr. The company believes the brand stands for Trust, Convenience, and Transparency. Paytm is available across the country with Paytm karo (use Paytm) evolving into a verb for hundreds of millions of Indian consumers, shopkeepers, merchants, and small businesses. The ecosystem allows to address multiple large market opportunities at scale and gives multiple growth vectors. Paytm has an addressable market in India across payment services, commerce & cloud services, and financial services. In 2009, the company launched Paytm App, which is the 1st digital mobile payment platform to offer cashless payment services to customers. One 97 Communications Ltd (Paytm) was incorporated in 2000, is a leading digital ecosystem for consumers as well as merchants. Thus, we recommend investors' to “subscribe this issue for listing gain”, said the Arihant Capital note. The valuation of the company is on the higher side.
Monetizing the large installed customer/merchant base of Paytm for broader financial service offerings, such as credit, wealth, and insurance will is the key opportunity for the company and it would lead to the profitability going forward. “Rising pace of digitalization continues to present significant opportunity to grow the user base for online transactions for bill payments, shopping, entertainment, and other financial needs,” said the report.
At the upper band of Rs 2150, the issue is valued at a P/BV of 21.3x FY21 P/BV and 49.7x FY21 P/sales (post issue).
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