We believe in tons of people making money: Vijay Shekhar Sharma on setting lower price band for Paytm's IPO
Bengaluru/UNI: Paytm CEO Vijay Shekhar Sharma Thursday said the company set a lower price band for its IPO because the company believes in tons of people making money by investing in it.
"I always believe that tons of people should make money on our company when they invest and be comfortable with that. So, we always go with the lower side of the band and this has worked for us in the past and hopefully will work in future as well," he said.
Paytm CFO Madhu Deora said the company does not believe in higher valuation bands because it wants to create value for new investors.
Paytm is offering its shares in the price range of Rs 2,080 to Rs 2,150 in the multiples of six aggregating to Rs 18,300 crore.
The firm’s valuation post listing on the bourses will be about $20 billion, a senior Paytm official said.
Deora said, "it is not possible right now to determine when the company will become profitable, but its June quarter and last financial year results show that the revenues across various segments have shown massive growth and we have turned contribution margin positive."
The company has reported healthy financial numbers during the pandemic and that investments in technology, business expansion, and recruiting talent will continue.
Deora said Paytm has reduced its marketing expenses by more than 60 per cent despite building a host of services, including insurance, wealth tech, and lending among other things.
Paytm saw a 62 percent rise in its revenues to Rs 891 crore in Q1 FY22 from Rs 551 crore in FY21. Its contribution margin had improved by 196 per cent to Rs 245 crore, during India's second Covid wave.
Asked when the reliance on lending partners will come down, Sharma said they don't need to come down because the credit business is fundamentally built for them.
He also said the company's spending is not reducing dramatically though it has started to make more money.
The company's losses are not reducing, he added.
Asked whether Paytm will put in more investment into eCommerce and Paytm Mall business, Deora said the company has never invested any money whatsoever in Paytm Mall.
Secondly, other companies can use Paytm as a brand name and pay royalty, and it also gives the opportunity to use payment services from Paytm and pay the fees, he added.
Sharma further said that the Paytm brand is valued at Rs 47,250 crore and despite the competition, customers and merchants are loyal to the platform.
The IPO will comprise a fresh issue of Rs 8,300 crore and an Offer for Sale (OFS) from existing shareholders amounting to Rs 10,000 crore.
The subscription for anchor investors, which will comprise global and homegrown institutional funds, will open and close next week.