India’s Biggest IPO (Initial Public offering) in history turn into a disaster. On November 18, Paytm is Listed in BSE & NSE with the name of One 97 Communications Ltd. The company is one of the Prominent Indian Companies by Vijay Shekhar Sharma.
The company's IPO was around 18300 crores because of its high
valuation the Stock falls 28 % from its initial stage and after a few months of the trading session, it falls up to 60% to 70%.
The Company has wiped out around 1.03 Lakhs crores in market
capitalization. At the time when I was writing this article, the company's market
capitalization was barely RS 35, 500 Crore as against 1.38 Lakhs crore for its
IPO time.
What are the Key points Which affect Paytm's IPO Failures?
Paytm which is one of the largest fintech companies in India, was started in August 2010 with an Initial Investment of $2 million by its Founder Vijay Shekhar Sharma in Noida, it is initially started with online Prepaid Recharge & DTH recharge and later it expanded its business to different fields Like - Landline recharge, Paytm Payment banks, post-paid recharge, etc.
What is Paytm Business Model? What are the problems They face in their
business model?
As Paytm is a fintech app, company so he always tries to
analyze customers' behaviors. So that it can Modify its Application according
to customer behaviors. Basically, Paytm is always forefront of innovation so
that it can provide top-notch services.
1. Mobile Bank and Customer Transaction.
Paytm focus on mobile banking facility and Instant customer
money transfer, so it charges some money to the merchant for their facility.
2. Mobile Recharges & Tickets services.
As Paytm and other apps like Phonepe, Google pay, Bharat pay, etc. They generate income from mobile
recharge, DTH recharge, electricity bills, and different payments system, and
where else they also charge some convenience fees to customers on Railway ticket
booking and Aeroplan Ticket bookings.
3. Advertisement
There are lots of companies that run Advertisement in Paytm
apps, and give discount coupons to attract customers for this service and
promotion Paytm charge some fees to a company that Advertises in the app.
4. Paytm Payment Bank
Paytm has launched the Paytm payment bank in 2016 with RBI Rules
& regulation with this business model Paytm deposit money from a customer
like other banks with giving high-interest rate up to 5% to 6% and in return
Paytm gives loan or credit card service to the customer and charge interest on a loan up to 10%.
5. Shopping Apps
Paytm Launched Paytm mall and another app for shopping that
gives exclusive deals to customers and other facilities similar to Flipkart and
Amazon.
Problems Face in their Business Model
For the many services which Paytm gives to their customer.
So, he needs customer Data, and Paytm spends RS200 to RS 300 per customer for This data
collection and now high court announce that Every Mobile Data company should
publish User Data (or share their user data with other Apps) so this is a big
disadvantage because Paytm in earliest one in money transfer and mobile
recharge app.
How Investors Trapped in Paytm IPO
Paytm IPO was overvalued, The Valuation of Paytm at the time
of IPO is 1.39 Lakhs crores were as the company was a loss-making company. The
revenue of Company was around 3300 hundred Crores.
Because the company is losses making company so we cannot
find Price to earnings ratio, so we find Price to Sells Ratio. so the price to
sales ratio will be 35.
What is the Price to Earnings Ratio & What is the Price to Sales Ration?
Paytm Payments Bank violating RBI Rules
The Reserve Bank of India (RBI) on Friday, March 11, 2022,
has banned new customer's Own boards in Paytm Payments Bank after that the
company's share price will start falling up to 20%.
This is not the first time there are many times when Paytm
payments bank has banned to getting more customers through RBI because of violating the Rules of RBI.
More Articles you will Like
0 Comments
please do not enter any spam link in the comment box.