11 YEARS ON, 370x BIGGER ONE97 TAPS IPO MARKET
Eleven years before Vijay Shekar Sharma’s One97 Communications, which owns digital payments pioneer Paytm, announced plans to go public, it had a nearly moment when it looked to raise ~120 crore in 2010. It had even announced the issue date, but shelved the listing plans at the last minute citing market volatility.
The firm operated then as a mobile value-added services (VAS) player, providing caller tune support, and was valued ~500 crore. That year there were 64 initial public offerings (IPOS) worth nearly ~38,000 crore. One97’s IPO would have added to the tally but would have hardly made a difference to the amount raised column. That was also the year when India saw its biggest IPO till date — the ~15,200-crore issue by state-owned Coal India.
Fast-forward 11 years, and One97 is set to surpass Coal India’s record with its ~16,600crore IPO. In the meantime, it has metamorphosed into a cutting-edge digital payments provider whose valuation has jumped around 370 times from about ~500 crore to an estimated $25 billion (around ~1.85 trillion), according to sources.
According to its DRHP filed in 2010, the company’s networth was just ~140 crore. Its total income for the financial year 2009-10 stood at ~119 crore and it had a net profit of ~16 crore. In sharp contrast, at the end of March 2021, Paytm’s networth was ~6,535 crore and total income stood at ~3,187 crore. The company’s balance sheet has grown manifold in the past decade. However, its networth is relatively subdued because it has been incurring huge losses as it chases growth by acquiring new clients and merchants. Ahead of its IPO, Paytm has made efforts to reduce losses. In FY21, its total loss stood at ~1,701 crore, 60 per cent lower than the ~4,230 crore logged in FY19 and 42 per cent lower than ~ 2,942 crore in FY20. This has been partly achieved by cutting marketing expenses from ~3,408 crore in FY19 to ~532 crore in FY21.
Paytm, an abbreviation of pay through mobile, started this journey by launching a service to top up cellphones and make other utility bill payments. The explosion in smartphone usage and
VIJAY SHEKHAR SHARMA-LED FIRM HAD TO SHELVE ~120-CR IPO LAST MINUTE IN 2010, CITING MARKET VOLATILITY
government’s move to demonetise ~500 and ~1,000 banknotes in November 2016 are seen as the big drivers of Paytm’s growth. After that, the firm aggressively added customers and merchants. Now, it is the country’s largest payment platform with 333 million customers and 21 million merchants. More recently, Paytm forayed into the full bouquet of financial services, which includes broking, mutual funds, insurance and wealth management through Paytm Money, which offers zero commission, direct investing in MF schemes. It has over 1.3 million MF consumers. On the broking side, it handled 208,000 trading accounts as of March 31. It has picked up backers like Softbank, Berkshire Hathaway, and the Ant Group. But its 2010 IPO prospectus offers little hint of this transformation.