Paytm IPO: Know the risks and rewards as issue opens for subscription tomorrow

The IPO, which concludes on November 10, comprises issuance of fresh equity shares worth ₹8,300 crore and Offer for Sale (OFS) by existing shareholders to the tune of ₹10,000 crore.

“While valuations may appear to be expensive, Paytm has become synonymous with digital payments through mobile and is the market leader in the mobile payment space. Patym is well positioned to benefit from the exponential 5x growth in mobile payments between FY2021 – FY2026 and hence believe that the valuations are justified. We recommend investors to SUBSCRIBE to the issue,” said Jyoti Roy – DVP- Equity Strategist, Angel One.

One 97 communications (Paytm) is India’s leading digital ecosystem for consumers and merchants. It is the largest payments platform in India, with a GMV of around ₹4 lakh crore in FY21. As of June 30, 2021, it offers payment services, commerce & cloud services, and financial services to 33.7 crore consumers & over 2.2 crore merchants.

Analysts at Choice Broking have recommended to subscribe for long term on the back of large market opportunities, product and technology DNA, leadership and culture. Though, it sees fast changing technological and services landscape in the payment services domain, revenue concentration risk, declining operational efficiencies and continued higher losses as key risks and concerns.

Paytm plans to use proceeds of the fresh issue to grow its business lines and acquire new merchants and customers. The company skipped pre-IPO funding round to expedite launch of the initial share sale.

Brokerage firm ICICI Securities has laid out extremely competitive markets with continuously evolving technology, failure to attract merchants & volumes can adversely affect business, dependency on payment services for majority of revenue as key risk & concerns.