One97 taps IPO market in new, bigger avatar 11 years after aborted attempt

Vijay Shekhar Sharma-founded firm had to shelve Rs 120-cr IPO last minute in December 2010

Vijay Shekar Sharma’s One97 Communications almost went public in 2010. It had even announced the issue date but shelved the listing plans last minute citing volatile market conditions.

That year saw 64 initial public offerings (IPOs) worth nearly Rs 38,000 crore. One97’s IPO would have added to the number tally but would have hardly made a difference to the amount raised column as its issue size was just Rs 120 crore. The same year, India saw its biggest IPO still date—Rs 15,200 issue by state-owned Coal India.

Fast forward 11 years, One97 Communication—the company that owns digital payments pioneer Paytm—is all set to surpass Coal India’s record with its Rs 16,600-crore IPO.

One97, which has the backing of SoftBank, Berkshire Hathaway and Ant Group, is eyeing valuations of around Rs 1.85 trillion in the IPO. Back in 2010, the company, which operated as a mobile value-added services (VAS) player, was valued at less than Rs 500 crore.

The jump in valuations is on the back of Paytm’s metamorphosis from being largely caller tunes support provider into a cutting-age digital payments provider.

According to its DRHP filed in 2010, the company’s networth was just Rs 140 crore. Its total income for the year ended March 2010 stood at Rs 119 crore and had net profit of Rs 16 crore. At the end of March 2021, Paytm’s networth was Rs 6,535 crore and total income stood at Rs 3,187 crore. The company’s balance sheet has grown many fold in the past decade. It’s networth remains relatively subdued as the company has been incurring huge losses in a bid to chase growth by acquiring new clients and merchants.

Ahead of its IPO, Paytm has made efforts to reduce losses. In FY21, its total loss stood at Rs 1,701 crore, 60 per cent lower than Rs 4,230 crore reported in FY19 and 42 per cent lower than Rs 2,942 crore in FY20. This has been partly achieved by cutting marketing expenses from Rs 3,408 crore in FY19 to Rs 532 crore in FY21.

Paytm—abbreviation of pay through mobile—started this journey by launching a service to top up mobile phones and make other utility bill payments. The explosion in smartphone usage and government’s move to demonetize Rs 500 and Rs 1,000 banknotes in November 2016 are seen as the big drivers of growth for Paytm. Following the move, the company aggressively added new customers and merchants. Currently, it is the country’s largest payment platform with 333 million customers and 21 million merchants.

More recently, Paytm has forayed into full bouquet of financial services which includes broking, mutual funds (MF), insurance and wealth management through its wholly owned arm Paytm Money.

Paytm Money offers zero commission, direct investing in MF schemes As per its offer document, it has over 1.3 million MF consumers. On the broking side, it handled 208,000 trading accounts as on March 31.

Its IPO prospectus from 2010 offers little hint of the present day Paytm.