Paytm IPO: Last week, Paytm's board approved the plan to raise Rs 22 thousand crore through IPO.
Paytm IPO: The country's largest digital payment company Paytm is preparing to bring an IPO this year. Since the announcement of the IPO, the share price of the company has increased tremendously in the unlisted market. The stock price of Paytm has almost doubled to Rs 24 thousand in the unlisted market. Before the news of the IPO coming, its prices were around Rs 11-12 thousand per share. Within just 5 days of the news of the IPO, its price reached 21 thousand rupees.
Based on the unlisted share prices, the value of the company has exceeded Rs 1.1 lakh crore. Accordingly, the valuation of the company has exceeded that of many other companies in the banking and financial sector, such as IndusInd Bank, Bandhan Bank, PNB, SBI Cards and Payments Services, SBI Life Insurance and ICICI Prudential. However, the current valuation of Paytm is lower than the 2019 valuation at which the company raised funds.
Last week, Paytm's board approved the plan to raise Rs 22,000 crore through IPO. According to the plan, this IPO can come during the quarter of October to December 2021 in this financial year. The company plans to raise Rs 21 to 22 thousand crores through IPO. For this, the company can file the draft of Red Herring Prospectus (DRHP) in July.
Share price increased by 100% in a week
According to Abhay Doshi, founder of Unlisted.com, a website dealing in pre-IPO and unlisted shares, Paytm shares were available at very cheap valuations before the IPO was announced. However, due to the valuation gap, its demand among investors increased and its shares climbed more than 100 percent in just a week. According to Doshi, due to the short supply of shares in the unlisted markets, only a limited number of deals are being done.The convict believes that before bringing the IPO, the company can take corporate action like bonus or share split.
Paytm is running in loss amidst tough competition
Alibaba's Ant Group (29.71 per cent), SoftBank Vision Fund (19.63 per cent), SAIF Partners (18.56 per cent and founder Vijus Shekhar Verma (14.67) have major stake in Paytm, besides AGS Holding, T Rowe Price & Discovery Capital and Warren While Buffett's Berkshire Hathaway holds less than 10 per cent stake in the company, Paytm is suffering business losses and is facing competition from Google Pay and PhonePe, which have established themselves well over the years.
Paytm is preparing to bring the country's largest IPO, plans to raise Rs 22500 crore from the market
Take your investment decision wisely
Aditya Kondwar, Founder and COO, JST Investments, believes that there is a need to be careful with the share price of Paytm in the unlisted market. According to Kondavar, Paytm has not decided the issue price yet, so it may also be that the price at which it will buy its shares from the unlisted market is much higher than the IPO price. In this case, there is a possibility of heavy loss.He said that this happened earlier also, when the pre-IPO price of Barbecue Nation was Rs 1100 which later came down to Rs 500 and its IPO came at Rs 500. In such a situation, it can be understood that the investors who would have taken the shares in pre-IPO 1100 rupees, how much would have been lost. Apart from this, pre-IPO shares also have a lock-in period of one year. According to Kondavar, investing in pre-IPO also gives profits, but investors should take a careful decision.
Vishal Balabhadruni, Banking Analyst, CapitalVia Global Research, says that there are high expectations from this stock and many investors are confident about profits from the IPO despite the high price. According to Balabhadruni, the price band of the IPO is yet to be decided, but in the gray market, such premiums can lead to listing gains.
(Stock recommendations in the story are based on information provided by research analysts and brokerage firms. Financial Express Online does not take any responsibility for any investment advice. Please consult your advisor before investing.)
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