Please refer to important disclosures at the end of this report
1
Incorporated in 2000, One 97 Communications Ltd is India's leading digital
ecosystem for consumers as well as merchants. In 2009, the company launched
the first digital mobile payment platform, "Paytm App" to offer cashless payment
services to customers and now, it became India's largest payment platform and the
most valuable payments brand. It offers payment services, commerce and cloud
services, and financial services to 337 million registered consumers and over 21.8
million registered merchants, as of June 30, 2021. Its software and cloud services
allows large, medium and small merchants to improve their business operations
and access important financial tools such as banking, wealth and credit facilities.
Positives: (a) India's leading digital payment service platform. (b) Strong brand
identity with a brand value of USD6.3 billion. (c) Huge customer base with 333
million total customers, 114 million annual transacting users, and 21 million
registered merchants. (d) Paytm Super-app to access a wide range of digital
payment services over mobile phones. (e) Will be one of the biggest beneficiaries
of 5x growth in mobile payments to USD 3,065bn between FY2021-FY2026.
Investment concerns: (a) Increase in payment processing charges to financial
institutions and card networks. (b) Failure by Paytm Payments Bank to support
services. (c) Unable to grow relationships, increase transaction volume, and attract
new merchants to ecosystem. (d) History of net losses and negative cash flows in
prior years.
Outlook & Valuation: At the upper end of the price band, Paytm is valued at 49.7x
its FY21 revenues. 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.
Key Finances
Y/E March (` cr)
FY2019
FY2020
FY2021
Net Sales
3,232
3,281
2,802
% chg
-
1.5
-14.6
Net Profit
-4,231
-2,942
-1,701
% chg
-
-30.5
-42.2
EBITDA (%)
-135.1
-80.3
-63.1
EPS (Rs)
(73.6)
(48.7)
(28.1)
P/E (x)
(29.2)
(44.1)
(76.5)
P/BV (x)
21.6
16.0
19.9
ROE (%)
(73.9)
(36.3)
(26.0)
ROCE (%)
(66.4)
(31.8)
(25.8)
EV/EBITDA
(28.4)
(49.2)
(73.6)
EV/Sales
38.4
39.5
46.4
Source: Company, Angel Research
SUBSCRIBE
Issue Open: Nov 08, 2021
Issue Close: Nov 10, 2021
Offer for Sale: `10,000 cr
QIBs 75% of issue
Non-Institutional 15% of issue
Retail 10% of issue
Public (Founder,
Investor & other Sh)
59.9%
Public (Other) 40.1%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `64.8cr
Issue size (amount): `18,300 cr
Price Band: `2080-2150
Lot Size: 6 shares and in multiple thereafter
Post-issue mkt. cap: * `1,34,841 cr - ** `1,39,379 cr
Public (Founder, Investor & other Sh) Pre-Issue: 71.3%
Public (Founder, Investor & other Sh) Post-Issue: 59.9%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: `8, 300 cr
Issue Details
Face Value: `1
Present Eq. Paid up Capital: `60.9 cr
One 97 Communications Limited (Paytm)
One 97 Communications Limited
(Paytm)|IPO Note
November 03, 2021
One 97 Communications Limited| IPO Note
Nov 03, 2021
2
Company background
One97 Communications Limited (“Paytm”) was incorporated on December 22,
2000. The company is India’s leading digital ecosystem for consumers and
merchants. Paytm offers ‘Payment Services’, ‘Commerce and Cloud Services’, and
‘Financial Services’ to 33.3 crore consumers and over 2.18 crore merchants
registered with them, as of June 30, 2021. The company launched Paytm in 2009,
as a “mobile-first” digital payments platform to enable cashless payments. Paytm
is available across the country with “Paytm karo” (i.e. “use Paytm”) evolving into a
verb for hundreds of millions of Indian consumers, shopkeepers, merchants and
small businesses.
Issue details
The issue comprises of offer for sale of upto `10,000 crore and Fresh issue of
`8,300Cr in the price band of `2080-2150.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Public (Founder, Investor & other Sh)
434,511,102
71.3
387,999,474
59.9
Public (Other)
175,157,906
28.7
260,274,185
40.1
Total
609,669,008
100.0
648,273,659
100.0
Source: Company, Angel Research & RHP.
Objectives of the Offer
Growing and strengthening Paytm ecosystem, including through
acquisition and retention of consumers and merchants and providing them
with greater access to technology and financial services - ₹ 4,300 Crores.
Investing in new business initiatives, acquisitions and strategic partnerships
- ₹ 2,000 Crores.
General corporate purpose.
Key Management Personnel
Mr. Vijay Shekhar Sharma is the Managing Director and Chief Executive Officer of
the Company and the Chairman of Board. Mr. Sharma is the founder of the
Company and oversees the Company's key strategic efforts including engineering,
design and marketing.
Mr. Munish Varma is a Non-Executive Director of Company and a nominee of
SVF on Board. He currently serves as a managing partner at SoftBank
Investment Advisers. He was also associated with Deutsche Bank AG.
Mr. Ravi Chandra Adusumalli is a Non-Executive Director of the Company and
a nominee of SAIF and Elevation Capital on Board. He holds a bachelor’s
degree in economics and government from Cornell University. He is currently
the managing partner of Elevation Capital
One 97 Communications Limited| IPO Note
Nov 03, 2021
3
Exhibit 1: Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
Total operating income
3,232.0
3,280.8
2,802.4
890.8
% chg
-
1.5
-14.6
61.6
Total Expenditure
7,598.1
5,915.2
4,569.7
1,261.7
Payment processing charges
2,257.4
2,265.9
1,916.8
526.5
Marketing and promotional expenses
3,408.3
1,397.1
532.5
137.7
Employee benefits expense
856.2
1,119.3
1,184.9
350.7
Software, cloud and data expenses
309.6
360.3
349.8
105.8
Other expenses
766.6
772.6
585.7
141.0
EBITDA
-4,366.1
-2,634.4
-1,767.3
-370.9
% chg
-
-39.7
-32.9
11.9
(% of Net Sales)
-135.1
-80.3
-63.1
-41.6
Depreciation& Amortisation
111.6
174.5
178.5
40.9
EBIT
-4,477.7
-2,808.9
-1,945.8
-411.8
% chg
-
-37.3
-30.7
10.7
(% of Net Sales)
-138.5
-85.6
-69.4
-46.2
Finance costs
34.2
48.5
34.8
9.7
Other Income- Gen
347.7
259.9
384.4
57.2
Other income(from joint venture)
14.6
-56.0
-74.0
-12.1
(% of Sales)
0.5
-1.7
-2.6
-1.4
Recurring PBT
-4,149.6
-2,653.5
-1,670.2
-376.4
% chg
-
-36.1
-37.1
34.2
Exceptional item
-82.5
-304.7
-28.1
-2.4
Tax
-6.5
-15.8
2.7
3.1
Loss frm discontinuation
-5.3
-
-
-
PAT (reported)
-4,230.9
-2,942.4
-1,701.0
-381.9
% chg
-
-30.5
-42.2
34.3
(% of Net Sales)
-130.9
-89.7
-60.7
-42.9
Basic & Fully Diluted EPS (Rs)
-73.6
-48.7
-28.1
Source: Company, Angel Research
One 97 Communications Limited| IPO Note
Nov 03, 2021
4
Exhibit 2: Consolidated Balance Sheet
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
SOURCES OF FUNDS
Equity Share Capital
57.5
60.4
60.5
60.5
Other equity (Retained Earning)
5,667.4
8,044.8
6,474.3
6,205.3
Shareholders’ Funds
5,724.9
8,105.2
6,534.8
6,265.8
Non-Cont. Interest
86.2
-14.0
-18.6
-20.3
Total Loans
696.2
208.7
544.9
476.0
Other liabilities
233.8
545.9
479.9
476.6
Total Liabilities
6,741.1
8,845.8
7,541.0
7,198.1
APPLICATION OF FUNDS
Property, plant and equipment
199.9
261.6
299.2
290.7
Right-of-use-assets
274.8
267.4
128.3
157.7
Capital work-in-progress
51.3
13.1
20.8
18.9
Goodwill
293.0
46.7
46.7
44.3
Other intangible assets
73.4
17.8
17.1
17.6
Intangible assets under development
4.3
1.6
2.8
1.2
Investment in joint ventures
46.0
76.2
-
-
Investment in associates
200.2
246.8
231.7
232.9
Current Assets
6,670.9
6,435.7
7,399.8
7,415.7
Investments
2,497.9
3,189.4
147.2
623.0
Trade receivables
454.4
493.2
471.3
534.9
Cash and cash equivalents
325.5
423.2
546.8
650.4
Bank balances other than CCE
135.8
117.0
2,329.6
1,847.6
Loans
276.4
24.2
161.1
72.7
Other financial assets
1,567.2
874.5
2,338.6
2,527.4
Other current assets
1,413.7
1,314.2
1,405.2
1,159.7
Current Liability
2,025.7
1,457.3
1,610.3
2,260.9
Net Current Assets
4,645.2
4,978.4
5,789.5
5,154.8
Other Non-Current Asset
953.0
2,936.2
1,004.9
1,280.0
Total Assets
6,741.1
8,845.8
7,541.0
7,198.1
Source: Company, Angel Research
One 97 Communications Limited| IPO Note
Nov 03, 2021
5
Exhibit 3: Consolidated Cash flows
Y/E March (`cr)
FY2019
FY2020
FY2021
Q1FY2022
Operating profit before working capital changes
-4,160.1
-2,356.9
-1,579.4
-313.9
Net changes in working capital
-132.3
6.8
-690.2
661.7
Cash generated from operations
-4,292.4
-2,350.1
-2,269.6
347.8
Direct taxes paid (net of refunds)
-183.5
-26.5
187.1
-17.1
Net cash flow operating activities
-4,475.9
-2,376.6
-2,082.5
330.7
Purchase of property, plant and equipment,
-177.3
-190.7
-192.7
-40.1
Proceeds from property, plant and equipment
2.4
4.1
5.6
1.2
Others
2,085.9
-1,809.7
2,116.9
-107.0
Cash Flow from Investing
1,911.0
-1,996.3
1,929.8
-145.9
Proceeds from issue of shares
2,189.3
5,054.0
10.7
1.5
Share issue expenses
-2.4
-14.0
-
-
Share application (pending allotment)
-
*
0.2
0.2
Acquisition of non-controlling interests
-36.9
-8.0
-6.3
-
Repayment of borrowings
-3.1
-
-
-
Others
-36.4
127.9
-226.7
413.6
Cash Flow from Financing
2,110.5
5,159.9
-222.1
415.3
Inc./(Dec.) in Cash
-454.4
787.0
-374.8
600.1
Opening Cash balances
89.7
-370.1
416.2
45.4
Exchange effect
-5.4
-0.7
4.0
4.6
Closing Cash balances
-370.1
416.2
45.4
650.1
Source: Company, Angel Research
One 97 Communications Limited| IPO Note
Nov 03, 2021
6
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
(29.2)
(44.1)
(76.5)
P/CEPS
(30.0)
(46.9)
(85.4)
P/BV
21.6
16.0
19.9
EV/Sales
38.4
39.5
46.4
EV/EBITDA
(28.4)
(49.2)
(73.6)
Per Share Data (Rs)
EPS (Basic)
(73.6)
(48.7)
(28.1)
EPS (fully diluted)
(73.6)
(48.7)
(28.1)
Cash EPS
(71.6)
(45.8)
(25.2)
Book Value
99.6
134.2
108.0
Returns (%)
ROE
(73.9)
(36.3)
(26.0)
ROCE
(66.4)
(31.8)
(25.8)
Turnover ratios (x)
Receivables (days)
51.3
54.9
61.4
Inventory (days)
-
-
-
Payables (days)
83.1
68.0
78.8
Working capital cycle (days)
(31.8)
(13.2)
(17.4)
Source: Company, Angel Research
One 97 Communications Limited| IPO Note
Nov 03, 2021
7
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E-mail: research@angelbroking.com
Website: www.angelone.in
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Disclosure of Interest Statement
1.Financial interest of research analyst or Angel or his Associate or his relative No
2.Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3.Served as an officer, director or employee of the company covered under Research No
4.Broking relationship with company covered under Research No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15%)
Hold (Fresh purchase not recommended)
