Noida-based One97 Communications - the parent company of digital payments startup Paytm - is set to launch a Rs 18,300 crore initial public offering (IPO) on Monday, November 8. Paytm shares will be available for bidding in the price band Rs 2,080-2,150 under the initial share sale.

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The Paytm public offer will close for subscription on Wednesday, November 10.

Paytm's IPO, if successful, will surpass that of state-run dry fuel behemoth Coal India to become India's largest primary market offering.

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Paytm last week said it had raised Rs 8,235 crore from anchor investors, including Blackrock, CPPIB and Birla MF.

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Paytm aims to utilise the proceeds from the IPO towards reinforcing its ecosystem through the acquisition and retention of more customers, fulfilling general corporate demands, and financing strategic collaborations, mergers and acquisitions, besides new business initiatives.

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Potential investors will be able to bid for Paytm shares in multiples of six. At the upper end of the price band, one lot will cost investors Rs 12,900.

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Should you subscribe to the Paytm IPO?

ICICI Direct

The brokerage has not rated the Paytm IPO. "One 97 Communication (Paytm) is a play on digitisation of various financial services including payments, investments & financial solutions," ICICI Direct said in a note.

At the upper end of the price band, One97 is valued at around 9.5 times its post-issue BV and at 24 percent of annualised GMV, it added.

Arihant Capital Markets

At the upper end of the price band, the Paytm issue is valued at 21.3 times its FY21 price-to-book-value ratio, and 49.7 times its FY21 price to sales ratio post-issue, Arihant Capital said in a note. Investors can subscribe for listing gains, it said.

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Angel One

While valuations may appear to be expensive, Paytm has become synonymous with digital payments through mobile and is the market leader in the mobile payment space, according to Jyoti Roy, DVP-Equity Strategist at Angel One.

At the upper end of the price band, Paytm is valued at 49.7 times its FY21 revenues, said Roy, who recommends subscribing to the Paytm IPO.

He believes Paytm is well-positioned to benefit from the exponential five times growth expected in mobile payments between FY2021 and FY2026, which justifies the higher valuations.

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