One97 Communications IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

One97 Communications IPO– Incorporated in 2000, One 97 Communications Ltd is India’s leading digital ecosystem for consumers as well as merchants. As of March 31, 2021, the company has a 333 million+ client base and 21 million+ registered merchants to whom it offers payment services, financial services, and commerce and cloud services

Business — The company offers an entire digital ecosystem for its customers and merchants –ranging from payment services (money transfers, in-store payments, recharge, and bill payments), and financial services (digital banking including FASTag, PayTM Wallet and deposit accounts, loan or BNPL referral, wealth management and insurance). Generating revenue in the form of transaction fee, consumer convenience fee, and recurring subscription fee (from merchants), payment services comprises 62 per cent of the company’s consolidated revenues in FY21 and 4 per cent comes from cross selling financial services

Also READ : Latent View IPO : SUBSCRIBE OR NOT

Offer purpose —

Growing and strengthening Paytm ecosystem, including through acquisition and retention of consumers and merchants and providing them with greater access to technology and financial services – ₹ 4,300 Crores, Investing in new business initiatives, acquisitions and strategic partnerships – ₹ 2,000 Crores and General corporate purposes

Risks —

Revenue scalability is the biggest risk as the RBI has restricted the transaction fees and commissions on various payment services to less than 1 percent. Already revenue drop is happening compared to last few years

Lot of uncertainty in digital share with lot of big players also joining the league ( like google, whatsapp etc)

Over diversified –Kind of deworsefication by company–not a clear path which will bring profit

Strength

India’s leading digital payment service platform.
Strong brand identity with a brand value of US$6.3 billion.
Large customer base with 333 million total customers, 114 million annual transacting users, and 21 million registered merchants.
Paytm Super-app to access a wide range of digital payment services over mobile phones.

Future

Company has been into multiple segments and can grow with digital payments and PayTM payments bank, MF business as well. But due to this scattered approach, no clear visibility which path company is taking. Road is long and uncertain.

Valuations

Valuations are extremely high, Founder skin in the game is really low

Should we apply?

AVOID

In case you have any questions/ queries, please feel free to reach me through Contact Form

Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.