Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Capital Markets

<p>The Oyo listing should be a win for Softbank Group, which owns 47% (pre-listing) for a mere $1.1bn but initial pricing talk of $10-12bn seems wildly optimistic when matched against comparable valuations for premium online travel companies like Airbnb (implied Oyo value $4bn) or India tech ($7bn). Last year we thought this was worthless, so the turnaround is a pleasant surprise but we would not be buyers over INR 80/share ($7bn).</p>

The Oyo listing should be a win for Softbank Group, which owns 47% (pre-listing) for a mere $1.1bn but initial pricing talk of $10-12bn seems wildly optimistic when matched against comparable valuations for premium online travel companies like Airbnb (implied Oyo value $4bn) or India tech ($7bn). Last year we thought this was worthless, so the turnaround is a pleasant surprise but we would not be buyers over INR 80/share ($7bn).

Oyo and Softbank Group - This Would Be Generously Valued at $4-7bn but that Keeps CEO Under Water

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

FSN E-Commerce Ventures (Nykaa) / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/fsn-e-commerce-ventures-nykaa" target="_blank" data-smartkarma-citation="entities:33796:1" rel="noopener">FSN E-Commerce Ventures (Nykaa) (1003622D IN)</a> provides e-retailing of beauty and fashion products through two verticals Nykaa (beauty and personal care) and Nykaa Fashion (apparel and accessories). Nykaa is the largest speciality beauty and personal care platform in India as measured by the value of products sold in the FY21, according to RedSeer. </p><p>Nykaa is looking to raise $500 million through an IPO in India, according to press reports. The IPO comprises a primary raise of Rs5,250 million ($70 million) and 43.1 million secondary shares. </p><p>Nykaa has a large addressable market opportunity with the beauty and personal care opportunity currently worth $16 billion and the fashion opportunity currently worth $54 billion, according to RedSeer. At 8% penetration in FY21, beauty and personal care are one of the more underpenetrated e-commerce categories in India. Online penetration in fashion in India is slightly higher at 12% in FY21 but is still relatively low compared to mature e-tailing categories such as mobiles and electronics. </p><div class="content-highlight"><p>Nykaa has a strong positioning in India’s e-commerce beauty products industry, underpinned by the strong brand recognition of the ‘Nykaa’ brand. It has been able to retain a large customer base, leading to repeat orders such that existing consumers accounted for 70% of GMV in FY21. Nykaa also has relationships with 2,476 brands but with no dependence on any brand or product. The financial performance is solid with strong growth, rising margins and cash generation. These characteristics should enable Nykaa to hold its own against intensifying competition. Overall, we think that Nykaa has attractive fundamentals.</p></div>

FSN E-Commerce Ventures (Nykaa) (1003622D IN) provides e-retailing of beauty and fashion products through two verticals Nykaa (beauty and personal care) and Nykaa Fashion (apparel and accessories). Nykaa is the largest speciality beauty and personal care platform in India as measured by the value of products sold in the FY21, according to RedSeer. Nykaa is looking to raise $500 million through an IPO in India, according to press reports. The IPO comprises a primary raise of Rs5,250 million ($70 million) and 43.1 million secondary shares. Nykaa has a large addressable market opportunity with the beauty and personal care opportunity currently worth $16 billion and the fashion opportunity currently worth $54 billion, according to RedSeer. At 8% penetration in FY21, beauty and personal care are one of the more underpenetrated e-commerce categories in India. Online penetration in fashion in India is slightly higher at 12% in FY21 but is still relatively low compared to mature e-tailing categories such as mobiles and electronics. Nykaa has a strong positioning in India’s e-commerce beauty products industry, underpinned by the strong brand recognition of the ‘Nykaa’ brand. It has been able to retain a large customer base, leading to repeat orders such that existing consumers accounted for 70% of GMV in FY21. Nykaa also has relationships with 2,476 brands but with no dependence on any brand or product. The financial performance is solid with strong growth, rising margins and cash generation. These characteristics should enable Nykaa to hold its own against intensifying competition. Overall, we think that Nykaa has attractive fundamentals.

<div>
<p><a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a>, formally known as One97 Communications, is India’s largest payments platform based on the number of consumers, number of merchants, number of transactions and revenue as of 31 March 2021, according to RedSeer. Paytm has an overall payments transaction volume market share of 40%, and wallet payments transaction market share of 65-70% in India as of FY21, according to RedSeer. Paytm’s shareholders include <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> (29.6% of outstanding shares), Softbank Vision Fund (18.3%), <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> (7.2%) and <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-b" target="_blank" data-smartkarma-citation="entities:8635:1" rel="noopener">Berkshire Hathaway Inc Cl B (BRK/B US)</a> (2.8%).  </p>
<p>Paytm is in talks with firms such as Abu Dhabi Investment Authority, GIC, Blackrock and Noumra to become anchor investors in its upcoming IPO, according to press reports. Paytm is also seeking to raise up to Rs166.0 billion ($2.2 billion) at a $20-22 billion valuation, according to press reports. </p>
</div><div><div>
<p>In <a href="https://www.smartkarma.com/insights/paytm-ipo-initiation-a-payments-led-super-app" target="_blank" data-smartkarma-citation="insights:54983" rel="noopener">Paytm IPO Initiation: A Payments-Led Super-App</a>, we opined that as India’s largest payments platform, Paytm is well placed to benefit from this structural tailwind. The advent of UPI has increased competition (Google Pay, PhonePe, <a href="https://www.smartkarma.com/entities/one-mobikwik-systems-ltd" target="_blank" data-smartkarma-citation="entities:33952:1" rel="noopener">One Mobikwik Systems (1235487D IN)</a>) but Paytm is also leveraging its dominance in digital payments to build a synergistic ecosystem of complementary services, resulting in a strong claim to the “super-app” tag. While the COVID-19 pandemic was disruptive particularly to the non-payments business, Paytm should return to growth as the impact of the pandemic wanes and vaccination rates rise in India. We concluded that Paytm's fundamentals are attractive. </p>
<div class="content-highlight"><p>In this note, we take a first look at Paytm's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.</p></div>
</div></div>


Paytm (PAYTM IN), formally known as One97 Communications, is India’s largest payments platform based on the number of consumers, number of merchants, number of transactions and revenue as of 31 March 2021, according to RedSeer. Paytm has an overall payments transaction volume market share of 40%, and wallet payments transaction market share of 65-70% in India as of FY21, according to RedSeer. Paytm’s shareholders include Ant Financial Services Group (6688 HK) (29.6% of outstanding shares), Softbank Vision Fund (18.3%), Alibaba Group (BABA US) (7.2%) and Berkshire Hathaway Inc Cl B (BRK/B US) (2.8%).  
Paytm is in talks with firms such as Abu Dhabi Investment Authority, GIC, Blackrock and Noumra to become anchor investors in its upcoming IPO, according to press reports. Paytm is also seeking to raise up to Rs166.0 billion ($2.2 billion) at a $20-22 billion valuation, according to press reports. 

In Paytm IPO Initiation: A Payments-Led Super-App, we opined that as India’s largest payments platform, Paytm is well placed to benefit from this structural tailwind. The advent of UPI has increased competition (Google Pay, PhonePe, One Mobikwik Systems (1235487D IN)) but Paytm is also leveraging its dominance in digital payments to build a synergistic ecosystem of complementary services, resulting in a strong claim to the “super-app” tag. While the COVID-19 pandemic was disruptive particularly to the non-payments business, Paytm should return to growth as the impact of the pandemic wanes and vaccination rates rise in India. We concluded that Paytm's fundamentals are attractive. 
In this note, we take a first look at Paytm's valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.


Equity Bottom-Up

<p>The next financial report for Softbank will be a tough one. With the quarterly results in, Vision Fund’s public portfolio losses appear to be in the range of $18.3bn with another $1.4bn in losses for parent level investments. China exposure is a major driver whilst Coupang continues to spiral down from the heady highs in March. The holding company discount has held up (-41% v -44% at Q1-end) but the underlying value per share has spiraled down as VF and Alibaba weaken. We think a higher discount makes more sense but optimism on upcoming IPOs for PayTM and AutoStore could lend support in the near-term. </p>

The next financial report for Softbank will be a tough one. With the quarterly results in, Vision Fund’s public portfolio losses appear to be in the range of $18.3bn with another $1.4bn in losses for parent level investments. China exposure is a major driver whilst Coupang continues to spiral down from the heady highs in March. The holding company discount has held up (-41% v -44% at Q1-end) but the underlying value per share has spiraled down as VF and Alibaba weaken. We think a higher discount makes more sense but optimism on upcoming IPOs for PayTM and AutoStore could lend support in the near-term. 

Softbank Group - A First Look at Investment Losses for the Quarter

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Private Capital Markets

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/232/788/original/image_19843735021632971070220.png?1632971071" class="editor-image img-responsive" data-smartkarma-image-id="232788"></figure>
<h2>Where do we go?</h2>
<p>In this multi-part series, we discuss some of the upcoming tech IPOs from India.  The focus is on the narrative and not much on the numbers, as numbers are available to all. Our commentary is based on candid, anecdotal observations and is presented as an alternative food for thought. </p>
<p>Companies covered in this Insight are <a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a>; <a href="https://www.smartkarma.com/entities/think-learn-pvt-ltd-byju-s" target="_blank" data-smartkarma-citation="entities:32203:1" rel="noopener">BYJU'S (1391510D IN)</a>; <a href="https://www.smartkarma.com/entities/fsn-e-commerce-ventures-nykaa" target="_blank" data-smartkarma-citation="entities:33796:1" rel="noopener">FSN E-Commerce Ventures (Nykaa) (1003622D IN) </a>and <a href="https://www.smartkarma.com/entities/flipkart-online-services-private-limited" target="_blank" data-smartkarma-citation="entities:31076:1" rel="noopener">Flipkart Online Services (1398508D IN)</a> </p>
<p>Topics covered include History, Operating metrics, Profitability, Regulatory environment and impact on the business model, What makes them Unique along with some forward-looking estimates and catalysts where available. </p>
<div class="content-highlight">
<p><em><strong>NB: </strong>This is a multi-part insight in order to improve readability as the companies covered represent different industries and each of them may attract different types of investors. </em></p>
</div>


Where do we go?
In this multi-part series, we discuss some of the upcoming tech IPOs from India.  The focus is on the narrative and not much on the numbers, as numbers are available to all. Our commentary is based on candid, anecdotal observations and is presented as an alternative food for thought. 
Companies covered in this Insight are Paytm (PAYTM IN); BYJU'S (1391510D IN); FSN E-Commerce Ventures (Nykaa) (1003622D IN) and Flipkart Online Services (1398508D IN) 
Topics covered include History, Operating metrics, Profitability, Regulatory environment and impact on the business model, What makes them Unique along with some forward-looking estimates and catalysts where available. 

NB: This is a multi-part insight in order to improve readability as the companies covered represent different industries and each of them may attract different types of investors. 


India Tech IPOs | Where Do You Go? | Paytm - Second Life

India

One 97 Communications Limited provides payment solutions. The Company provides online services such as hotel booking, top ups, data processing, games, mobile content, and bill payments. One 97 Communications Limited serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Paytm (PAYTM IN)

Oyo and Softbank Group - This Would Be Generously Valued at $4-7bn but that Keeps CEO Under Water

An Oyo listing is a likely win for Softbank, which owns 47% for a mere $1.1bn but pricing talk of $10-12bn is optimistic compared to the $4-7bn...

Kirk Boodry

Nykaa IPO Initiation: Beauty Parade

Nykaa is looking to raise $500 m through an IPO in India. The financial performance is solid with strong growth, rising margins and cash...

Arun George

Paytm IPO: Valuation First Look

Paytm is seeking to raise up to $2.2 billion at a $20-22 billion valuation. Overall, based on our valuation analysis, we think that the rumoured...

Arun George

Softbank Group - A First Look at Investment Losses for the Quarter

The next financial report for Softbank will be a tough one. With quarterly results in, Vision Fund’s public portfolio losses are c. $18.3bn. We...

Kirk Boodry

India Tech IPOs | Where Do You Go? | Paytm - Second Life

In this multi-part series, we discuss upcoming and most recent tech IPOs from India. The focus is based on candid, anecdotal observations and is...

Pranav Bhavsar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)