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PB Fintech Limited (Policybazaar) IPO - 7 Things to Know About

PB Fintech Limited (Policybazaar) IPO - 7 Things to Know About
by 5paisa Research Team 27/10/2021

PB Fintech Ltd, the company behind the digital brand Policybazaar, opens its IPO on 01-November. Policybazaar offers an agnostic platform for potential customers to research, compare, shortlist and buy insurance policies online.

Apart from Policybazaar, PB Fintech also offers the highly popular Paisabazaar, which provides online loans and real time credit rating for potential borrowers.

 

Here are 7 things to know about PB Fintech IPO
 

1) Policybazaar was launched in 2008 to offer consumers greater choice and transparency in the choice of insurance policies. Policybazaar offers a wide palate of over 340 products including term policies, health policies, motor, home and travel insurance. 

2) Policybazaar has a 93.4% market share in terms of number of digital policies sold as per a Frost & Sullivan Report. Even if you look at in terms of volumes of policies sold, over 65% of all digital policies sold in India are through the Policybazaar platform. Like most digital plays, PB Fintech is also loss making and it made a loss of Rs.150cr in FY21.

3) Policybazaar has some core strengths like an agnostic platform, ability to execute call to action, deep partnerships with originators, proprietary technology ensuring deep customer intelligence and insights as well as very high renewal rates in the business.

4) The PB Fintech IPO will be open for subscription from 01-November to 03-November. The price band has been fixed in the range of Rs.940-980. The total issue size will be Rs.6,017 crore comprising of a fresh issue of Rs.3,750 crore and OFS of Rs.2,267 crore.

5) The fresh issue component of Rs.3,750 crore will go towards a number of value accretive purposes. Rs.1,500 crore will be allocated to building brand awareness of the PB Fintech family.

It will allocate Rs.375 crore for customer expansion while it has allocated Rs.600 crore for strategic acquisitions and inorganic growth. It will also allocate Rs.375 crore for global expansion plans.

6) The basis of allotment will be finalized on 10-Nov while refunds will be initiated on 11-November. While the shares will be credited to respective demat accounts on 12-November, the shares will be listed on the NSE and BSE from 15-November.

7) PB Fintech has a Marquee list of lead managers including Citigroup, HDFC Bank, I-Sec, IIFL Securities, Jefferies, Kotak Mahindra Capital and Morgan Stanley. Link Intime will be the registrars to the issue.

The PB Fintech issue will be to enhance the visibility of both its digital brands viz. Policybazaar and Paisabazaar. Info Edge, which owns a significant stake in Zomato, also owns a major stake in PB Fintech.

Also Read:

Upcoming IPOs in 2021

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NJ India Made a Record in Maiden NFO

NJ India Made a Record in Maiden NFO
by 5paisa Research Team 27/10/2021

The most recent entrant to the mutual fund space, NJ India Mutual Fund has raised a record Rs.5,200 crore from its maiden NFO of the NJ Balanced Advantage Fund. This is the highest amount ever collected by any maiden NFO by any fund. NJ has been one of India’s top ranked independent mutual fund distributors and that network helped substantially.

For more than 14 years, the record for the highest collection by a mutual fund in its maiden NFO was held by Pinebridge, which had collected Rs.1,104 crore in May 2007.

By that comparison, the maiden NFO by NJ India Mutual fund has collected nearly 5 times the amount. NJ has a larger goal of launching a family of passive funds in India.

NJ India has one of the best agent networks for mutual funds and is the highest commission earning distributor outside of the distributing banks. The NFO leveraged the massive network of over 8,000 distributors of NJ Finvest to sell the NFO.

In fact, NJ was the first case of a pure mutual fund distributor integrating forward towards mutual fund origination.

The NJ Balanced Advantage Fund was obviously influenced by the incredible success of the SBI MF Balanced Advantage Fund. Typically, these balanced advantage funds are also called dynamic allocation funds.

They set a base allocation for equity and debt and then have a rule based reallocation shifting allocations sharply. For example, one rule can be that if PE crosses above a threshold then equity exposure will be cut. It is largely passive in nature.

In the last few months, some of the NFOs have managed to collect huge sums of money. For example, the record NFO collection was by SBI MF Balanced Advantage Fund, which collected a record Rs.14,500 crore. This was followed by the NFO of ICICI Prudential Flexi Cap Fund which collected Rs.9,500 crore.

Check - Flexi Cap NFO

The NJ MF NFO is significant for a number of reasons. Firstly, it will be a test of how much investors are willing to rally behind a new mutual funds. That has been answered.

The second question is whether there is a market for passives. In fact, if you look at the mutual fund AUM, then hybrids and passives today account for over 25% of the total AUM. It appears there is room for passives and NJ may in the right place at the right time.

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PB Fintech Policybazaar IPO - Information Note

PB Fintech Policybazaar IPO - Information Note
by 5paisa Research Team 27/10/2021

PB Fintech Ltd (Policybazaar and Paisabazaar) IPO Note

PB Fintech, the company that owns powerful digital brands like Policybazaar.com and Paisabazaar.com. Policybazaar IPO is opening on 01-November.

While PB Fintech launched Policybazaar way back in 2008, the launch of Paisabazaar was more recent in 2014. The company is looking at the IPO to augment its digital reach and for inorganic growth.

Among the two key properties of PB Fintech, Policybazaar offers an agnostic market place for insurance products.

Individuals can research various insurance  policies, compare them on specified parameters, check out originators and also close the sale with the help of screeners.

Paisabazaar, on the other hand, is a credit and loan syndicator for customers with a digital algorithm based on credit score and past payment records.

 

Key terms of the PB Fintech (Policybazaar and Paisabazaar) IPO
 

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

01-Nov-2021

Face value of share

Rs.2 per share

Issue Closes on

03-Nov-2021

IPO Price Band

Rs.940 - Rs.980

Basis of Allotment date

10-Nov-2021

Market Lot

15 shares

Refund Initiation date

11-Nov-2021

Retail Investment limit

13 Lots (195 shares)

Credit to Demat

12-Nov-2021

Retail limit - Value

Rs.191,100

IPO Listing date

15-Nov-2021

Fresh Issue Size

Rs.3,750.00 crore

Pre issue promoter stake

N.A.

Offer for Sale Size

Rs.1,875.00 crore

Post issue promoters

N.A.

Total IPO Size

Rs.5,625.00 crore

Indicative valuation

Rs.44,051 crore

Listing on

BSE, NSE

HNI Quota

15%

QIB Quota

75%

Retail Quota

10%

Data Source: IPO Filings

 

Here are some of the key points about the PB Fintech business model
 

1. As of Mar-21, Policybazaar has 4.80 crore registered customers and has sold over 1.90 crore policies digitally

2. In the financial year FY21 alone, the total number of visits on the Policybazaar website stood at 12.65 crore making the property extremely valuable

3. While Policybazaar has a 90% share of the digital insurance market, Paisabazaar has 51% of the digital consumer credit market place

4. Between them, Policybazaar and Paisabazaar have 51 insurance partners and 54 lending partners, opening up vistas for cross selling

5. The model is capital light, efficient and being digital, it is substantially scalable in a short span of time

6. The Indian insurance opportunity in terms of premium amount is expected to grow from $100 billion to $500 billion by 2030. As of now digital is just 1% of insurance sales, opening a world of opportunity for Policybazaar.
 

Check: 7 Things to know about Policybazaar IPO
 

Structure of the PB Fintech (Policybazaar and Paisabazaar) IPO
 

The IPO will be a combination of a fresh issue and an offer for sale. Here is a gist of the IPO offer of the company.

1. The fresh issue component will entail the issue of 3.826 crore shares and at the peak price band of Rs.980 per share, the fresh issue amount will be Rs.3,750 crore. 

2. The OFS component will comprise of the issue of 1.913 crore shares and at the peak price band of Rs.980, the OFS value would be Rs.1,875 crore resulting in a total IPO issue size of Rs.5,625 crore.

3. While Softbank of Japan, an early backer of PB Fintech, will be the biggest seller in the OFS, the promoter family consisting of Yashish Dahiya and Shikha Dahiya will also be participating in the OFS.

At the upper end of the price band, PB Fintech with its combined properties of Policybazaar and Paisabazaar will be valued at Rs.44,051 crore.

 

Financials of PB Fintech (Policybazaar and Paisabazaar)

 

Financial Parameters

Fiscal 2020-21

Fiscal 2019-20

Fiscal 2018-19

Sales Revenues

Rs.957.41 cr

Rs.855.56 cr

Rs.528.81 cr

Net Profit

Rs.-150.24 cr

Rs.-304.03 cr

Rs.-346.81 cr

Total Assets

Rs.2,330.73 cr

Rs.1576.00 cr

Rs.751.45 cr

Data Source: Company RHP

Like most of the digital plays, there is a lot of front ending of spending and investments in the case of PB Fintech, which means it still makes losses. However, the losses have been narrowing and in the last one year alone the losses have narrowed from Rs.304 crore to Rs.150 crore.

It is expected that as the publicity and advertisement spend peaks out and as the IPO funds are used for expansion, the profits would gradually begin to show up.

The company plans to use the IPO funds for enhancing visibility of the brands to the extent of Rs.1,500 crore. In addition, it would spend Rs.600 crore on inorganic acquisitions, Rs.375 crore on customer expansion and another Rs.375 crore on international forays.
 

Investment Perspective for PB Fintech (Policybazaar and Paisabazaar)
 

In the case of PB Fintech, it is more about the huge digital opportunity considering that India is underpenetrated both with respect to insurance share and digital share.

a) It has the backing of marquee investors like Temasek, Softbank and Info Edge; all known for picking digital winners early.

b) The 5-fold growth in insurance premium penetration and the mere 1% digital penetration are the two big opportunities for PB Fintech.

c) Traditional valuation metrics will not work in this case as the company makes losses at a net level. The justification for the market valuation has to come from the potential of the business and its scalability. On both the counts, there is little doubt.

Also Read:

Upcoming IPOs in 2021

Fino Payments Bank IPO - Information Note

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Fino Payments Bank IPO - Information Note

Fino Payments Bank IPO - Information Note
by 5paisa Research Team 28/10/2021

Fino Payments Bank is fully owned by Fino PayTech Ltd with a focus on digital offering of financial products and services. It largely operates through its network of agents, merchants and business correspondents.

Fino offers CASA deposits, debit card related transactions, Aadhar-enabled and micro ATMs, CMS and sale of financial products and services.

Fino Payments Bank is 14 years old and was incorporated in 2007. As a payments bank, it can take deposits but cannot give loans and its revenue model mainly comes from fee based services from its merchant partners as well as its long term commercial partnerships.

The focus of Fino Payments Bank will be more on the unbanked population of India.
 

Key terms of the IPO issue of Fino Payments Bank
 

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

29-Oct-2021

Face value of share

Rs.10 per share

Issue Closes on

02-Nov-2021

IPO Price Band

Rs.560 - Rs.577

Basis of Allotment date

09-Nov-2021

Market Lot

25 shares

Refund Initiation date

10-Nov-2021

Retail Investment limit

13 Lots (325 shares)

Credit to Demat

11-Nov-2021

Retail limit - Value

Rs.187,525

IPO Listing date

12-Nov-2021

Fresh Issue Size

Rs.300.00 crore

Pre issue promoter stake

100%

Offer for Sale Size

Rs.900.00 crore

Post issue promoters

75%

Total IPO Size

Rs.1,200.00 crore

Indicative valuation

Rs.4,801 crore

Listing on

BSE, NSE

HNI Quota

15%

QIB Quota

75%

Retail Quota

10%

 

Data Source: IPO Filings
 

Here are some of the characteristics of the Fino Payments Bank model


i) Fino Payments Bank is a fully digital bank, which offers its products and services digitally on an all India basis.

ii) It offers CASA, micro ATMs, Aadhar-enabled ATMs and CMS or cash management services to clients.

iii) Despite being small in size, it achieves scale through the distribution, technology and partnership (DTP) framework.

iv) Fino has a pan-India presence across 724,671 merchants predominantly in Tier-2 and Tier-3 cities plus over 17,430 business correspondents.

v) Fino also reaches out to customers via its 54 branches and 130 customer service points or CSPs.

vi) While Fino Payments Bank is fully owned by Fino PayTech, the parent company has equity investments from Blackstone, ICICI Bank, Intel Capital and BPCL.
 

Structure of the Fino Payments Bank IPO


The Fino Payments Bank IPO will be a combination of a fresh issue and an offer for sale. Here is a gist of the IPO offer of the company.

a) The fresh issue component will entail the issue of 52 lakh shares and at the peak price band of Rs.577 per share, the fresh issue amount will be Rs.300 crore. 

b) The OFS component will comprise of the issue of 156.03 lakh shares and at the peak price band of Rs.577, the OFS value would be Rs.900 crore resulting in a total IPO issue size of Rs.1,200 crore.

c) The holding company, Fino PayTech, which owns 100% in Fino Payments Bank will see its total stake diluted to 75% post the issue.

Out of their holding of 780 lakh shares, the parent will offer 156 lakh shares resulting in their holdings reducing to 624 lakh shares post the OFS.
 

Financial highlights of the Fino Payments Bank

 

Financial Parameters

Fiscal 2020-21

Fiscal 2019-20

Fiscal 2018-19

Total Income

Rs.791.03 cr

Rs.691.40 cr

Rs.371.12 cr

Net Profit

Rs.20.47 cr

Rs.-32.04 cr

Rs.-62.38 cr

Net Worth

Rs.150.55 cr

Rs.130.07 cr

Rs.162.11 cr

Net Profit Margins

2.59%

-4.63%

-16.80%

 

Data Source: Company RHP

The payments bank has turned around to profits over the last 3 years and shows that the payment bank model can be a viable model.

However, a lot will depend on the ability of the bank to scale up its operations from these levels and also whether banking for the unbanked would really be a profitable proposition in the long run.
 

Check - Fino Payments Bank IPO - 7 Things to Know
 

Investment view on Fino Payments Bank


In a way, Fino Payments Bank will be a convergence play on social banking, consumer demand, rural interface as well as the scaling ability of digital. Here are key points.

a) The DTP model is a distributed model adopted by Fino and that enables the company to grow to higher levels of revenue and profit without too much of outlays.

b) The parent company of Fino Payments Bank has marquee investors like Intel Capital, Blackstone and ICICI Bank onboarded, which is an affirmation of the business model.

c) An asset light business model will ensure that as the top line grows, it will directly contribute to enhancement of ROI and to valuations of the stock; which perhaps is the logic for the 220X pricing of the IPO.

d) Banking at the bottom of the pyramid is not extensively explored as a model but competition can be intense from the unorganized segment.

The current IPO stories are all about betting on future models. From that perspective, Fino Payments Bank is a combination of digital and of social banking.

Some of its peer group would include Paytm Payments Bank, Airtel Payments Bank, India Post Payments Bank, NSDL Payment Bank etc.

Also Read:- 

Upcoming IPOs in 2021

PB Fintech Policybazaar IPO - Information Note

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7 Stocks to Buy This Diwali & Get 20-40% Returns

Diwali Picks 2021
by 5paisa Research Team 28/10/2021

Samvat 2077 has given investors multiple reasons to cheer. Both the benchmark indices – Sensex and Nifty surged over 50% each, gazing beyond the transitory pain arising from the pandemic. Broader markets, however, outperformed the benchmark indices. Unlike previous rallies, retail investors too reveled in this party, as reflected by opening of record number of Demat Accounts. Market performance was driven by factors such as high liquidity, improving economic growth and enhanced profits of India Inc.

As we welcome Samvat 2078, near-term challenges such as surging prices of energy and commodities, higher valuations and possible unwinding of the accommodative monetary policy in both US and India await us. On the flip side, presence of long term catalysts such as continued improvement in the domestic economy and improving earnings growth of India Inc lend comfort. In this scenario, we bring you 7 stocks which could give stellar returns over the next one year.

 

In this scenario, we bring you 7 Diwali Stocks which could give stellar returns over the next one year.

Diwali Picks 2021 -

Stock

CMP (As on Oct 26)

Target Price

Upside (%)

Hindustan Unilever

₹ 2,436.15

₹ 2,950

21%

HDFC Life

₹ 690.15

₹ 980

42%

L&T (Larsen & Toubro)

₹ 1,794.45

₹ 2,192

22%

Tech Mahindra

 ₹ 1,562.90

₹ 1,900

22%

Inox Leisure

₹ 419.70

₹ 530

26%

Max Healthcare Institute

₹ 343.70

₹ 475

38%

Bata India

₹ 1,988.85

₹ 2,380

20%

 

Lets look at these stocks in detail –

1. Hindustan Unilever

CMP (October 26, 2021): Rs. 2,436.15

Target Price: Rs. 2,950

Upside: 21%

HUL needs no introduction. Every Indian uses several products from HUL’s stable ranging across the categories of home and personal care to foods and refreshments. The company is looking to optimize its portfolio and the value offered to customers, besides driving digitalization across its channels. While HUL has a strong reach in every nook and cranny of the country, it is now focusing on hyper-localization through its Win in Many India’s (WiMI) strategy. Focus on premiumization of its brands is likely to augur well for HUL, and resonate well with mid-premium to value consumers. Growing investments in Artifical Intelligence and Machine Learning capabilities will help HUL personalize customers’ experiences while driving cost optimization for distributors and other business partners.

 

2. HDFC Life

CMP (October 26, 2021): Rs. 690.15

Target Price: Rs. 980

Upside: 42%

HDFC Life Insurance Company, a joint venture between HDFC Ltd. and Standard Life Aberdeen, is a leading private life insurer in India. Growing distribution reach is a key internal growth driver for the company, with highly underpenetrated life insurance market being an external one. Post-acquisition of Exide Life, HDFC Life will become the second largest private life insurer with a market share of ~16.5% in total new business APE (Annualized Premium Equivalent). Improving product portfolio, customer-centricity, solid financial profile and growing protection business will drive the company’s future performance. Rising share of annuity and protection products, coupled with strong operating leverage should support consistent margin expansion for HDFC Life.

 

3. Larsen & Toubro

CMP (October 26, 2021): Rs. 1,794.45

Target Price: Rs. 2,192

Upside: 22%

Larsen & Toubro or L&T is a large Indian conglomerate present in several sectors including technology, engineering, construction, manufacturing and financial services. It is a proxy play on the Indian economy, given its vast presence in the infrastructure sector. Company has a robust order book and management is confident of strong order inflows in the foreseeable future. Water, Heavy Engineering, Power T&D and Transportation infra are likely to drive order inflows and market share gain for L&T, given the government’s continued emphasis on these segments. L&T’s ability to execute its order book efficiently, reduce working capital, drive cost optimization and leverage digital technologies make it stand out from its competitors. Robust prospects of its IT subsidiaries (L&T Infotech, L&T Technology Services and Mindtree) also augur well for the consolidated entity.

 

4. Tech Mahindra

CMP (October 26, 2021): Rs. 1,562.90

Target Price: Rs. 1,900

Upside: 22%

Part of the prestigious Mahindra Group, Tech Mahindra is one of India’s leading IT services company. After languishing its peers in terms of growth as well as profitability for quite some time, the company seems to have achieved high visibility and consistency on these fronts. Robust deal wins (especially in key verticals of telecom and enterprise), resilient margins and enhanced capital allocation are some of its key strengths. Management expects to clock in double digit growth in revenues during FY22 and maintain margins at ~15%. The stock, though, continues to trade at a sharp discount to peers (~30%) and can catch up significantly from here on.

 

5. Inox Leisure

CMP (October 26, 2021): Rs. 419.70

Target Price: Rs. 530

Upside: 26%

Inox Leisure is one of the largest multiplex chains in India and had 156 multiplexes and 658 screens in 70 cities, as of October 2021. The company is one of the worst hit from the pandemic as multiplexes remained closed for the longest time. Hence, it is one of the key beneficiaries from reopening of multiplexes across the country. Inox Leisure plans to take its total screen count to 692 by March 2022. As restrictions around vaccinations ease and good content releases across languages, occupancies and ticket prices can reach pre-pandemic levels. Company is also focusing on non-movie revenues (live sporting events, corporate events, games, etc.) to reduce seasonality of the business. Its strong position and net debt-free balance sheet are some of the other key positives.

 

6. Max Healthcare Institute

CMP (October 26, 2021): Rs. 343.70

Target Price: Rs. 475

Upside: 38%

Max Healthcare Institute (MHI) is the second largest listed healthcare provider in India and operates 17 healthcare facilities (total 3,400 beds). MHI enjoys dominant position in northern India. The company is also present in preventive & pre/post-hospitalization care at home and diagnostics services segments. Its focus on premium markets (Mumbai, Delhi NCR) augurs well for its Average Revenue Per Occupied Bed (ARPOB). MHI enjoys better ARPOB than peers owing to more number of operational beds. Its plans to add another 1,630 beds by FY28 lend high visibility to future growth. Company is also looking for strategic inorganic opportunities. Overall, it is well placed to capture emerging opportunities in the healthcare space.

 

7. Bata India

CMP (October 26, 2021): Rs. 1,988.85

Target Price: Rs. 2,380

Upside: 20%

Bata India is one of the oldest players in the Indian footwear market and offers products across all categories (men, women, kids) and price points (mass market to premium). The company’s nationwide footprint (over 1,500 stores) and strong brand recall are its key strengths. Additionally, it has scaled up focus on e-commerce which contributed 15% to FY21 revenues. Its omni-channel solutions provide superior experience to customers. Company’s strategic focus areas include change in product mix towards casual footwear, cost optimization, expanding reach through the asset-light franchisee model and enhancing potential of omni-channel. It is on the right path to improve growth as well as profitability in the future.

 

Before concluding, I leave you with a thought-provoking quote from none other than the ‘oracle of Omaha’- Warren Buffet: “The stock market is designed to transfer money from the active to the patient.” So, follow a disciplined, patient approach to investments.

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PayTm IPO - 7 Things to Know Before Applying for IPO

PayTm IPO
by 5paisa Research Team 28/10/2021

One 97 Communications (Paytm) has announced its IPO date just 4 days after the SEBI approved its draft red herring prospectus. At Rs.18,300 crore, the IPO will be 22% bigger than the largest IPO till date of Coal India, which raised Rs.15,000 crore in 2010. Here is what you must be aware of.
 

Here are 7 things you need to know about the One97 Communications (Paytm) IPO


1) The IPO will open for subscription on 08-November and close for subscription on 10-November. The price band for the IPO has been set in the range of Rs.2,080 to Rs.2,150 and each market lot will consist of 6 shares.

2) The basis of allotment of the IPO of One97 Communications (Paytm) IPO will be completed on 15-November while the refunds will be initiated on 16-November.

While the shares will be credited to the respective demat accounts on 17-November, the stock will get listed on the NSE and the BSE on 18-November.

3) Paytm has an enviable customer base of nearly 33 crore, or about one-fourth of the Indian population. It also has about 2.1 crore registered merchants on its platform and there are close to 11.5 crore transacting users on the Paytm platform.

Paytm actually pioneered digital money and m-commerce in India in a big way.

4) The original size of the Paytm IPO was Rs.16,600 crore. However, subsequently, the OFS was expanded to take the total issue size to 18,300 crore.

This will comprise of a fresh issue of Rs.8,300 crore and an offer for sale by existing shareholders of Rs.10,000 crore.

5) One97 Communications (Paytm) was originally looking at a higher valuation of $25-30 billion. However, after the first round of road shows, the expected valuation is closer to $20 billion.

As per a report prepared by Kantar Brandz, Paytm has a brand valuation of close to $6.3 billion.

6) Out of the Rs.8,300 crore that will be raised by way of fresh issue, it will invest close to Rs.4,300 crore in strengthening the Paytm ecosystem, customer expansion and deeper penetration into financial services via Paytm Money.

It will also allocate Rs.2,000 crore to inorganic expansion via the acquisition route.

7) Paytm is a loss making company and for FY21 it reported a net loss of Rs.1,701 crore which substantially narrowed from a loss of Rs.2,942 crore in FY20.

The sharp reduction in losses was due to much of its marketing, publicity and advertising expenses getting front-ended. Losses have narrowed by 60% in the last 2 fiscal years.

Paytm has a marquee list of seven merchant bankers while Link Intime will be the registrars to the issue.

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