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Paytm is coming up with an IPO to raise Rs 16,600 crore from the public, IPO consist a fresh issue of Rs 8,300 crore and an offer for sale (OFS) of Rs 8,300 crore by its founder Vijay Shekhar Sharma and by its existing shareholders. The face value of each share will be around Rs 1. 

About Company

Paytm is an Indian multinational technology company, specializes in digital payment system, e-commerce, finance and banking. Paytm is the largest payment platform of the country and the most valuable payments portal with total brand value of USD 6.3 Billion Paytm is leading digital payment system in India which provides cashless transactions, recharges of mobile phones, paying bills, online transfer of money, digital banking services, booking of various tickets, buying insurances, making of investments, shopping and many more; Paytm has more than 33.3 crore client base and more than 2.1 crore registered merchants as of 31^st March 2021.

2009 – Paytm Launched

2012 – Paytm Gateway

2014 – Paytm wallet

2015 – QR codes, Movie Ticketing and Bill payments

2016 – Flight Ticketing

2017 – Paytm Payments Bank, Paytm Gold, FASTag, Events Ticketing

2018 – Paytm First games, Paytm Money, Postpaid

2019 – Sound Box

2020 – All in one QR, All in one gateway, All in one Android POS (point of sale)

2021 – Credit Cards, Insurance, Smart POS, Equity Trading

Paytm has many marquee investors backing the company which includes the Alibaba Group, Ant Fincancial, SoftBank, SAIF Partners, and Berkshire Hathaway.

Paytm has foreign subsidiaries in Singapore in the merchant payments and E-commerce space.

In 2018, Paytm has partnered with SoftBank and Yahoo Japan to launch PayPay, PayPay is the leading digital payments, and financial services company in Japan. PayPay has 38 million users with transactions reaching 2 billion in volume and 3.2 trillion yen in value in FY 2021.

Paytm is the India’s largest payments platform in terms of number of consumer, number of merchants and number of transactions.

Paytm currently has more than 33.3 crore retail customers and 2.1 crore merchants. Paytm has total 8 lakh payments devices and 6.4 crore payment bank accounts. Paytm is having a total bank deposit of over Rs 5,200 crore.

Business Model-

Paytm works for mainly two sides, one is for consumers and secondly it works for merchants-

Consumer side- Paytm predominately offers to its customers a high frequency cases like bill payments and money transfers through established products like Paytm wallet, Paytm Postpaid, Paytm Payment Saving Bank account, and FASTag. Paytm also offers high products to these customers, which includes personal loans, investments and insurance.

Merchants’ side- For merchants, Paytm offers QR facility, online payment gateway, sound box, Paytm business payments, and merchant lending, advertising, and cloud services.

How Paytm generates its revenue?

Paytm generates its revenue from two segments-

Payment &Financial services and Commerce and Cloud services- in this services Paytm makes money from transaction fee charged from merchants and convenience fee charge from consumers and subscription fees from merchants for certain products and services, like Paytm Sound box and POS (point of sale) devices.

Industry Overview-

Paytm basically works in two business verticals which include finance segment and e-commerce segment. Finance segment of Paytm covers online transaction based payment, we have discussed about this industry in Mobikwik IPO analysis. To understand the industry growth we need to go through the following points-

1. India to have approximately 1 billion internet users by FY 2026
2. Digital payments are expected to more than double from USD 20 trillion in FY 2021 to USD 40-50 trillion by FY 2026.
3. Mobile payments expected to reach ~ USD 3.1 trillion by value by FY 2026
4. The travel ticketing market stands at ~USD 16 billion in FY21 and is expected to reach US$ 60 billion by FY 2026
5. Gaming industry in India is expected to become USD 12-13 billion by FY 2026 that will grow by 4.5 times from FY 2021
6. Advertising market in India stood at USD 9.3 billion in FY21 and is expected to more than double by FY26.

Competitors and Peers

Paytm has very big competitors which are getting a strong back from behind, it includes Amazon, Google pay, Phonepay, Mobikwik etc. are the strong competitors of the company.

Financials of the Company

Amount is in INR Crore

Strengths

• Paytm is India’s leading digital transactional service based platform.
• Paytm is having a strong brand value of USD 6.3 Billion.
• Paytm has huge customer base of 33.3 crore user 11.4 crore annual transacting users and 2.1 crore registered merchant.
• Paytm is so popular among the youth and as it’s an Indian startup people has positive image of Paytm.
• Paytm has its subsidiary in Singapore and its subsidiary in Japan is the leading online transactional based platform with more than 3 crore users.
• Paytm is loss making company but the decreasing trend on its loss can be seen over the last 3 years.
• Paytm has timely acknowledged the trend and demand of consumers and adopted the time need services for its platform, like booking tickets, bill payments, buying gold, UPI payments, Paytm Payments Bank and various others.
• Paytm has diversity of different business segments, like Banking, E-commerce, and digital transactional business segment.

Risk Factors

• Company is loss making company, company’s losses is increasing rapidly, although after analyzing the demand and need of the consumer company has expanded itself across the market and adopted various other segments.
• Company works in various other segments, like company works on online transactions, ticketing, recharges, postpaid, e-commerce, bill payments, selling of POS or Sound boxes, Payment bank etc focusing in so many business verticals may affect the business revenue of company.
• Company is having certain competitors to be in the consumers Demand Company offers its customers a regular cash backs and offers which directly affects company’s revenue, profit and cash flows.