IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

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<p><a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a>, formally known as One97 Communications, is India’s largest payments platform based on the number of consumers, number of merchants, number of transactions and revenue as of 31 March 2021, according to RedSeer. Paytm has an overall payments transaction volume market share of 40%, and wallet payments transaction market share of 65-70% in India as of FY21, according to RedSeer. Paytm’s shareholders include <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> (29.6% of outstanding shares), Softbank Vision Fund (18.3%), <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> (7.2%) and <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-b" target="_blank" data-smartkarma-citation="entities:8635:1" rel="noopener">Berkshire Hathaway Inc Cl B (BRK/B US)</a> (2.8%).  </p>
<p>Paytm is in talks with firms such as Abu Dhabi Investment Authority, GIC, Blackrock and Noumra to become anchor investors in its upcoming IPO, according to press reports. Paytm is also seeking to raise up to Rs166.0 billion ($2.2 billion) at a $20-22 billion valuation, according to press reports. </p>
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<p>In <a href="https://www.smartkarma.com/insights/paytm-ipo-initiation-a-payments-led-super-app" target="_blank" data-smartkarma-citation="insights:54983" rel="noopener">Paytm IPO Initiation: A Payments-Led Super-App</a>, we opined that as India’s largest payments platform, Paytm is well placed to benefit from this structural tailwind. The advent of UPI has increased competition (Google Pay, PhonePe, <a href="https://www.smartkarma.com/entities/one-mobikwik-systems-ltd" target="_blank" data-smartkarma-citation="entities:33952:1" rel="noopener">One Mobikwik Systems (1235487D IN)</a>) but Paytm is also leveraging its dominance in digital payments to build a synergistic ecosystem of complementary services, resulting in a strong claim to the “super-app” tag. While the COVID-19 pandemic was disruptive particularly to the non-payments business, Paytm should return to growth as the impact of the pandemic wanes and vaccination rates rise in India. We concluded that Paytm's fundamentals are attractive. </p>
<div class="content-highlight"><p>In this note, we take a first look at Paytm's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.</p></div>
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Paytm (PAYTM IN), formally known as One97 Communications, is India’s largest payments platform based on the number of consumers, number of merchants, number of transactions and revenue as of 31 March 2021, according to RedSeer. Paytm has an overall payments transaction volume market share of 40%, and wallet payments transaction market share of 65-70% in India as of FY21, according to RedSeer. Paytm’s shareholders include Ant Financial Services Group (6688 HK) (29.6% of outstanding shares), Softbank Vision Fund (18.3%), Alibaba Group (BABA US) (7.2%) and Berkshire Hathaway Inc Cl B (BRK/B US) (2.8%).  
Paytm is in talks with firms such as Abu Dhabi Investment Authority, GIC, Blackrock and Noumra to become anchor investors in its upcoming IPO, according to press reports. Paytm is also seeking to raise up to Rs166.0 billion ($2.2 billion) at a $20-22 billion valuation, according to press reports. 

In Paytm IPO Initiation: A Payments-Led Super-App, we opined that as India’s largest payments platform, Paytm is well placed to benefit from this structural tailwind. The advent of UPI has increased competition (Google Pay, PhonePe, One Mobikwik Systems (1235487D IN)) but Paytm is also leveraging its dominance in digital payments to build a synergistic ecosystem of complementary services, resulting in a strong claim to the “super-app” tag. While the COVID-19 pandemic was disruptive particularly to the non-payments business, Paytm should return to growth as the impact of the pandemic wanes and vaccination rates rise in India. We concluded that Paytm's fundamentals are attractive. 
In this note, we take a first look at Paytm's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.


Forensic Analyst, Trudence Capital Advisors

Nitin Mangal

Forensic Analyst

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

One Mobikwik Systems / Equity Capital Markets

<p>It is not surprising to see a fresh IPO filing of a new-age tech, internet platform company every week. In this insight, we talk about another fintech payments company, <a href="https://www.smartkarma.com/entities/one-mobikwik-systems-ltd" target="_blank" data-smartkarma-citation="entities:33952:1" rel="noopener">One Mobikwik Systems (1235487D IN)</a> (Mobikwik) who is one of the nearest competitors to <a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a> . While Paytm is an entire universe in itself; Mobikwik's services have a narrower sphere albeit still varied to some extent in terms of product offerings.</p><p>Mobikwik was incorporated in 2008, and since then it has established itself as one of the pure-play payments company, justified by the consumer payments segment contributing nearly 80% to the consolidated GMV and 72.5% to the consolidated topline. Consumer payments consists merchant fee when users transacts via MobiKwik Wallet, and certain convenience fees.</p><p>The wallet segment contributes heavily to the topline for the company but it also has a lot of competitors. Hence, Mobikwik's key differentiating product becomes the BNPL segment (Buy now pay later) which was launched not a long time ago, and can be a potential game changer for the company. BNPL is effectively a credit product given to its users by lending partners via Mobikwik platform. BNPL includes short term 15-day cycle product which is interest fee (Zip), along with EMI products for a longer tenure having an interest component (Zip EMI).</p><p>Mobikwik, in order to generate an additional source of revenue via leveraging, also offers payment gateway services i.e. Zaakpay to its merchants in return for a fee. </p><p>Mobikwik may have a diverse stream of payments and credit revenue, but it, however, suffers from a plethora of discomforts. The company has a negative net worth (Ind AS) since F19 and has a very poor visibility of any profits in the short-mid term, although it has reported positive segment-wise results. Moreover, operations were seriously affected in F21 and they don't seem to be a stand-out, especially when other competitors like Paytm are lurking around. The balance sheet issues extend to incorrect treatment and some puzzling line items. Final nail in the coffin is seen in the form of several regulatory and legal issues, which can put Mobikwik in a fix.</p>

It is not surprising to see a fresh IPO filing of a new-age tech, internet platform company every week. In this insight, we talk about another fintech payments company, One Mobikwik Systems (1235487D IN) (Mobikwik) who is one of the nearest competitors to Paytm (PAYTM IN) . While Paytm is an entire universe in itself; Mobikwik's services have a narrower sphere albeit still varied to some extent in terms of product offerings.Mobikwik was incorporated in 2008, and since then it has established itself as one of the pure-play payments company, justified by the consumer payments segment contributing nearly 80% to the consolidated GMV and 72.5% to the consolidated topline. Consumer payments consists merchant fee when users transacts via MobiKwik Wallet, and certain convenience fees.The wallet segment contributes heavily to the topline for the company but it also has a lot of competitors. Hence, Mobikwik's key differentiating product becomes the BNPL segment (Buy now pay later) which was launched not a long time ago, and can be a potential game changer for the company. BNPL is effectively a credit product given to its users by lending partners via Mobikwik platform. BNPL includes short term 15-day cycle product which is interest fee (Zip), along with EMI products for a longer tenure having an interest component (Zip EMI).Mobikwik, in order to generate an additional source of revenue via leveraging, also offers payment gateway services i.e. Zaakpay to its merchants in return for a fee. Mobikwik may have a diverse stream of payments and credit revenue, but it, however, suffers from a plethora of discomforts. The company has a negative net worth (Ind AS) since F19 and has a very poor visibility of any profits in the short-mid term, although it has reported positive segment-wise results. Moreover, operations were seriously affected in F21 and they don't seem to be a stand-out, especially when other competitors like Paytm are lurking around. The balance sheet issues extend to incorrect treatment and some puzzling line items. Final nail in the coffin is seen in the form of several regulatory and legal issues, which can put Mobikwik in a fix.

India

One Mobikwik Systems Pvt. Ltd. provides software solutions. The Company offers mobile application for online mobile recharge and payments. One Mobikwik Systems is based in India.

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One Mobikwik Systems (1235487D IN)

Paytm IPO: Valuation First Look

Paytm is seeking to raise up to $2.2 billion at a $20-22 billion valuation. Overall, based on our valuation analysis, we think that the rumoured...

Arun George

Mobikwik IPO: Secure Enough?

Mobikwik has a diverse stream of payments and credit revenue, but it also suffers from a range of discomforts such as poor balance sheet health,...

Nitin Mangal

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