One 97 Communications Limited

Incorporated in  2000, One97 Communications Limited  is India’s leading digital ecosystem.  The IPO of the parent company of Paytm opens for subscription between 8 and 11 November. Paytm’s public issue is likely to be India’s biggest IPO so far.  

Here is everything you should know about the much-hyped Paytm IPO:

Reasons for going public and objective of the IPO

• Strengthening and growing the Paytm ecosystem through customer and merchant acquisition and retention
• Providing its customers and merchants greater access to technology and financial services 
• Initiating strategic partnerships and investing in new business initiatives and acquisitions
• Meeting the general corporate requirements

Company fundamentals

Here is some key fundamental information about the company:

Five largest shareholders of Paytm

Shareholder Name	Percentage of Shares
Antfin (Netherlands) Holding B.V.	27.9%
SVF India Holdings (Cayman) Limited	17.3%
SAIF III Mauritius Company Limited	11.4%
Vijay Shekhar Sharma (Founder)	9.1%
Alibaba.Com Singapore E-Commerce Private Limited	6.8%

Financial Information

Particulars	FY21	FY20	FY19
	(₹ crore)
Revenue	2,802	3,280	3,232
Net loss	(1,701)	(2,942)	(4,230)

Over the past decade, the balance sheet has grown manifold. However, the primary reason for the losses is the company's continuous efforts in acquiring new clients and merchants. That said, Paytm has been making efforts to reduce its losses

Overview of business

Paytm started as a service for mobile top-ups and other utility bill payments. However, the company has aggressively expanded its service offering to create an all-encompassing digital payment ecosystem. Some of the most popular services available on the Paytm app include:

• Flight, bus and train ticket booking
• Investment platform (Paytm Money)
• E-commerce platform for retail goods (Paytm Mall)
• Interbank transfers and fixed deposits (Paytm Payments Bank)
• Digital Gold (Paytm Gold)
• Insurance products (Paytm Insurance)

Strengths

• First-mover advantage
• One of the India’s leading and most trusted payment platforms
• Strongtech focus approach
• Each transaction provides insights into how Indians spend and save
• Experienced management team
• The all-encompassing financial services ecosystem 
• Strong brand identity 
• Wide customer and merchant base
• Network effect leads to low acquisition costs and higher monetisation 

Opportunities

• Growing demand for fintech players such as Paytm 
• The surge in digitisation of finance is likely to work to the advantage of the company
• The untapped potential of the consumer payment market in India 
• Expand into international markets 

Threats

• Cut-throat competition from domestic and global tech companies like Google Pay, PhonePe, MobiKwik, etc.
• Growing concerns about the safety of online payments and financial transactions
• Change in digital payments and online financial services rules and legal compliance parameters

Risks

• A history of net losses
• Economic slowdown due to the pandemic and other unexpected major market volatile events
• Increase in payment processing charges to be paid to financial institutions and card networks
• Pending litigations against the company, its subsidiaries and directors
• Inability to form strategic partnerships or acquire new customers and merchants
• Failure to innovate technologically
• Dependency on third parties for some business verticals
• Relying on mobile operating systems and application marketplaces
• Any privacy or data security breach, cyber-attacks or internal misconducts