Paytm IPO rating: Subscribe for long term, recommends Canara Bank Securities

One97 Communications, which operates under the Paytm brand name, announced the country's biggest initial public offer, opening on November 8, in the price band of Rs 2,080-2,150 per share, implying a valuation of around Rs 1.48 lakh crore. 

The Rs 18,300 crore-offer, if successful, will be the biggest in the country after Coal India's IPO back in 2010 wherein the state-owned company had garnered Rs 15,200 crore.

In its note, Canara Bank Securities Ltd has recommended subscribe for long term to the Paytm issue.

Recommending subscribe for Paytm IPO, Canara Bank Securities Ltd said, "The company exhibits substantial growth in user base and GMV since its inception within the Fin-tech sector. Moreover, the business is scalable due to high convenience of digital banking. However, the issue is available at P/B of 49.74x for FY21 which is expensive. However, we recommend Subscribe for long term to the issue."

The IPO -- which will close for subscription on November 10 -- comprises issuance of fresh equity shares worth Rs 8,300 crore and offer for sale (OFS) by existing shareholders to the tune of Rs 10,000 crore.

The company's IPO price band values it in the range of USD 19.3 - 19.9 billion.

At current exchange rates, the enterprise value is Rs 1.44 lakh crore to Rs 1.48 lakh crore. 

The company skipped pre-IPO funding round to expedite launch of the initial share sale.