Zomato IPO Review .pdf (721.0 KB)
Zomato IPO Review different prospective…
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The perspective is to subscribe for the IPO. I am yet to find anyone who is telling to be cautious of the valuations.
Or the fact that, it’s not known if this company can ever make a profit. None of the Tech Product companies (Flipkart, Ola, Swiggy, Zomato, Udaan etc.) have ever made a profit.
People who subscribe for the listing gains obviously don’t bother about the profit of the company and I don’t think all the people who want to subscribe because of FOMO or otherwise know about the valuations or the profit.
Nonetheless when a company’s services or products are penetrated and it becomes a household name, the likelihood of the stock making new highs after listing is higher.
Also, considering the long growth, addressable market size, duopoly nature, unit economics may get better with time and it could post good profits going forward. If this narrative is in fact true, then the time to invest is when the price falls lower to the IPO price after a few quarters due to the company making losses and everyone is selling, if at all that happens. Otherwise the price could skyrocket in tandem with the bull market.
PAYTM Mega IPO
Paytm gets shareholders’ nod to raise Rs 12,000 crore, founder Vijay Shekhar Sharma to be declassified as promoter
100% of PayTM will be free float… Nifty50 addition very likely when it lists!
IPO-bound payments firm Paytm is also witnessing multiple high profile exits just ahead of its initial public offering.
One97 Communications, the parent company of fintech major Paytm on July 12 received approval from its shareholders at an extraordinary general meeting to raise Rs 12,000 crore through a fresh issue of shares, paving way for one of India’s largest initial public offerings (IPO) in recent times.
The issue will also have a secondary, where existing shareholders will sell their shares. This will bring the total amount to Rs 16,600 crore.
Shareholders also gave their nod for Paytm founder and CEO Vijay Shekhar Sharma to be declassified as promoter, as he does not own the requisite 20 percent stake in the firm. Sharma currently owns 14.61 percent in the company.
Sharma will continue to be the chairman, managing director and chief executive officer of the company.
This is in line with Paytm’s plan to become a PMC or a professionally managed company , which requires approval from Securities and Exchange Board of India (SEBI). Under this norm, no single entity can own 25 percent or above in the company.
Paytm’s key shareholders include Alibaba & Ant Group, which own 38 percent, SoftBank, which owns 18.73 percent and Elevation Capital (previously SAIF partners), which owns 17.65 percent.
Moneycontrol reported earlier that [the combined size of the IPO], including both fresh issue and the offer for sale by selling shareholders, is likely to be in the range of $2.2 billion to $2.3 billion, aiming for a valuation between $24 Billion and $25 Billion. If this happens, Paytm’s initial share sale would exceed Coal India, which raised Rs 15,000 crore in the country’s biggest IPO so far.
Paytm will be filing its Draft Red Herring Prospectus with the SEBI shortly, the first step towards a public listing. It has already finalised seven investment banks, namely Morgan Stanley, Goldman Sachs, ICICI Securities, JP Morgan, Axis Capital, Citi and HDFC.
The stakeholders, on July 12, also approved the changes in the Employee Stock Options Plan (ESOP) besides the adoption of new articles of association. The changes are in accordance with the provisions of the stock exchanges.
Ahead of its initial public offering (IPO) Jing Xiandong of Ant Group has exited One97’s board and is being replaced by Douglas Lehman Feagin, as per filings with the registrar of companies (ROC) Moneycontrol accessed. Feagin is the senior vice president of Ant Group and is based out of the US.
The company has also appointed Ash Lilani, managing partner of Saama Capital as an independent director.
Michael Yuen Jen Yao of Alibaba Group Holding and Todd Anthony Combs of Berkshire Hathaway have retired by rotation following the last Annual General Meeting held on June 30.
Apart from the board rejig, the company had also approved the allotment of 5,44,870 equity shares to former and existing employees upon exercise of Employee Stock Options (ESOPs) by them.
PayTM is also witnessing multiple high profile exits just ahead of its initial public offering including that of Amit Nayyar who was brought in to spearhead the company’s financial services ambitions.
Paytm in its recent annual report said it had clocked revenue of Rs 3,186 crore for FY 20-21 vs Rs 3,540 crore in the previous year. It narrowed losses to Rs 1,701 crore during the same period from Rs 2,942 crore in the previous year.
Interestingly, this is not One97’s first attempt to go public. In 2010, the company, which then used to provide value-added services (VAS) for telecom customers, planned to raise Rs 120 crore ($28 million basis a decade old conversion rate) through an IPO. It had to cancel its plan because of market volatility.
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With heavy over subscriptions, getting allotment in IPO is an issue. Looks below MF is good way to participate in IPOs along with applying for IPO directly. Adding some amounts regularly to this fund could be a way to not miss out IPOs.
Note : This fund do not invest in all IPO’s only good ones based on their analysis.
Edelweiss Recently Listed IPO Fund
https://www.edelweissmf.com/types-of-mutual-funds/equity-fund/edelweiss-recently-listed-ipo-fund
MF presentation on strategy. will give good insights.
Disc: seeing lot of IPO’s lined up, just started investing in this fund today.
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Good article to understand different valuation perspectives…Ultimately value lies in the eyes of the beholder…
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Anand Rathi Wealth files IPO papers with SEBI
The IPO is entirely an offer for sale (OFS) of 1.2 crore shares by promoters and existing shareholders, the company’s draft red herring prospectus (DRHP) showed.
Anand Rathi Financial Services Ltd (ARFSL) will offer 9.29 million shares and Anand Rathi, Pradeep Gupta, Priti Gupta, Supriya Rathi, Amit Rathi, Rawal Family Trust, Feroze Azeez will offer up to 375,000 shares each. Jugal Mantri, the Group CFO, will offer up to 90,000 shares.
The company has appointed Equirus Capital, BNP Paribas, IIFL Securities Limited, Anand Rathi Advisors Limited as the merchant bankers to the IPO. The shares will be listed on both BSE and NSE.
Anand Rathi Wealth operates in the financial services industry, focusing on mutual fund distribution and the sale of financial products. It has been ranked among the top three non-bank mutual fund distributors in India by gross commission earned in the fiscal year 2019-20.
It manages Rs 26,058 crore in assets under management (AUM) as of March 21 and caters to 6,109 active client families.
As of March 2021, Anand Rathi, the founder of the Anand Rathi Group, holds a 12.85 percent stake in the firm, while ARFSL holds 43.12 percent. Pradeep Gupta, the co-founder and vice-chairman of the Anand Rathi Group, holds a 5.48 percent stake in the firm.
The company aims to enhance its brand name and provide liquidity to the existing shareholders via the IPO. It had filed draft papers with SEBI for a Rs 425-crore IPO in 2018 but had withdrawn the proposal.
Here’s a presentation on tech IPOs.
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Great insights by Prof. Aswath Damodaran on Paytm’s IPO.
As per his assumptions, the intrinsic value is Rs. 2190/share. The challenge for Paytm will be to improve their take rate on Gross Merchandise Value (GMV). Currently, it’s at a meagre 0.79% (March 2021). Paytm can be an interesting play for the next few years as the industry is expected to grow fivefold.
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Update about PayTM payment banks
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT109F9B7531E7DB449C7AD33EB50D3BA6DF5.PDF
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Source:- LiveMint
The issue is roughly priced at 2394 PE (considering weighted average Basic EPS)
Source:- RHP
At the price of ₹1125/share, they’re getting a valuation of ₹53,204 Cr (Refer below for the calculations which includes the amount raised through Fresh issue)
| Number of Shares | |
|---|---|
| Shares Outstanding | 46,73,24,550 |
| Fresh Issue | 56,00,000 |
| Total | 47,29,24,550 |
| Issue price | ₹ 1,125 |
| MCap at Issue Price (in Cr) | ₹ 53,204 |
| EPS | 0.47 |
| PE | 2,393.62 |
Price to Sales is around 22x which is definitely on the higher side.
Nykaa can be an interesting play for the future. People can refer the below video posted by SOIC for greater insights.
Excellent business, insane valuation 
Lets not hope this is the peak of bull run!
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Nyka has bought brand dot and key.
Dot and key is a skincare brand and has recently expanded itself into nutraceuticals.
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Yes, I agree the valuations are high,
But checking PE ratio for a startup company would give misleading results that too with a weighted avg. EPS of last 3 years instead of TTM .
Early stage companies have more focus on gaining higher market share (Revenue) than on profits.
A Price/Sales multiple will be more suitable here.
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The band at which the issue is priced is actually less than Prof. Aswath Damadoran’s intrinsic value (after considering various number of assumptions). A decent amount of margin will be available for the investors in this IPO.
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