Paytm share allocation likely on Nov 16 at Rs 2,150 apiece

Digital payments and financial services firm Paytm is likely to allocate shares at the upper price band of Rs 2,150 apiece on November 16 after market regulator SEBI's approval which is expected to come on Monday, sources aware of the development said.

Earlier the allocation was expected to take place on Monday and the Paytm Money app also displayed the same.

"Paytm share allocation is likely to take place on Tuesday after approval of SEBI. The approval from SEBI is expected to come on Monday," one of the sources said.

Based on the bid received for Paytm's Rs 18,300 crore initial public offer (IPO), the company will list an enterprise valuation of Rs 1,49,428 crore or slightly over USD 20 billion at an exchange rate of 74.35.

The country's biggest IPO was subscribed 1.89 times with institutional buyers including FIIs flooding the share sale with offers seeking 2.79 times the number of shares reserved for them.

The company saw participation from blue chip investors like Blackrock, Canada Pension Plan Investment Board, GIC, ADIA, APG, City of New York, Texas Teachers Retirement, NPS Japan, University of Texas, NTUC Pension out of Singapore, University of Cambridge etc.

Retail investors lapped up for 1.66 times the 87 lakh shares reserved for them.

Paytm is set for a bumper listing, likely on November 18, and will be one of India's most valued companies.

Its large issue size meant that the sheer value of its retail size is much larger than that seen in recent internet IPOs like that of Zomato or Nykaa, combined.

Some of the largest IPOs before like Coal India's had seen the highest subscription on the final day of bidding.

Coal India had closed at 15.28 times on the last day. The same trend was seen even for recent, and significantly much smaller IPOs like Nykaa and PolicyBazaar, where more than 90 per cent of the QIB bids, and also overall bids came in on Day 3.

Paytm IPO comprised a fresh issue of equity shares worth Rs 8,300 crore and an offer for sale (OFS) of shares worth up to Rs 10,000 crore.

The OFS, or secondary share sale, consisted of the sale of shares worth up to Rs 402.65 crore by founder Vijay Shekhar Sharma.

The company set aside 75 per cent of the offer for QIBs, 15 per cent for non-institutional investors, and the remaining 10 per cent for retail investors.

Incorporated in 2000, One97 Communications is India's leading digital ecosystem for consumers and merchants.

It offers a range of services to the users – payment services and financial services.

According to a Reliance Securities report, the IPO is valued at 43.7 times of financial year (FY) 2021 price-to-sales and 36.7 times of  FY'22 annualized price-to-sales, which is at a discount of  about 12 per cent to the recently-listed unicorn, Zomato.

"While there is no listed peer available for Paytm in the domestic market, we believe high valuations for unicorns like Paytm that have created significant scale and brand equity, are likely to sustain.

"Further, a strong 33 per cent CAGR in GMV over FY19-FY21, despite the pandemic, vindicates Paytm's leadership and brand value," the report said.

Canara Bank Securities said that the valuation of the issue is expensive at price-to-book (P/B) ratio and recommended long term subscription.

"The company exhibits substantial growth in 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.

"However, the valuation appears to be expensive at P/B of 49.74 times for FY'21.

"Thus, we recommend Subscribe for the long term to the issue," the report said.

Photograph: Shailesh Andrade/Reuters