Market price

Vendors disappear over the Paytm counter in the Gray Market; the price is expected to skyrocket

New Delhi: Despite a sharp 70% increase in unlisted shares of One97 Communications, the promotion company of Paytm, in less than a week, dealers in the pre-IPO market forecast another 100% jump from levels current.

Their calculations are based on estimated IPO valuations.

According to a research report from Planify, a pre-IPO consultancy firm, the total number of shares of Paytm stood at 5,75 33,866 as of fiscal 2019. The company raised $ 1 billion in during the year, giving itself a valuation of $ 15.5 billion. This would set the valuation per share at Rs 18,000-18,500.

Since then, the company has neither diluted its equity nor raised more funds. Thus, it is assumed that the number of shares has remained the same. However, the annual reports for fiscal years 2019-20 and 2020-21 are not yet in the public domain.

The company backed by Alibaba and Softbank has decided to go public with an initial public offering of $ 3 billion (Rs 21,700 crore) and is expected to aim for a valuation of $ 25 to 30 billion (Rs 1.8 to 2.2 lakh crore). That would make it the biggest IPO ever by an Indian company.

With a valuation of 30 billion dollars (Rs 2.17 lakh crore), Paytm would be placed among the top 20 national players by market capitalization and ahead of many blue chips such as L&T, Ultratech Cement, Nestlé, JSW Steel and Avenue Supermarts.

Founder Vijay Shekhar Sharma currently owns a 14.8% stake in the company. Alibaba and its subsidiary Ant Financial together hold 37%, while Soft Bank holds 20% and SAIF Partners 19%. Warren Buffet’s Berkshire Hathaway holds just under 3 percent.

There is upside potential of up to 100% in unlisted stocks as the company plans to double the valuation from the last fundraiser, said Rajesh Singla, founder of Planify. “If the number of shares remains constant, then at a valuation of $ 25 to $ 30 billion, each Paytm share will be valued in the range of Rs 33,500 to Rs 37,500,” he said.

According to reports, SoftBank is looking to sell shares worth around $ 1.5 billion, giving the Japanese multinational conglomerate its biggest exit in India after Flipkart.

Shares of One97 Communications climbed to Rs 18,500 from just Rs 10,000 in the unofficial market, as investors rushed to exploit it after the IPO announcement. The action traded at Rs 8,500 last May.

Dinesh Gupta, co-founder of UnlistedZone, is optimistic about the company’s long-term profitability and cited robust growth potential and diversification of financial services, delivered in the single app. “A 70% increase in the share is still quite possible on the unlisted market. The sellers disappeared overnight, ”he said.

Sandip Ginodia, CEO of Kolkata-based Altius Investech, is cautious about the title. “Such valuations are absurd and investors are showing a herd mentality here,” he said.

“They just calculated the share price on the basis of rumors, not the intrinsic value of the company. None of the company’s divisions are making a profit, which should make investors be cautious, ”he said.