Paytm valuation at $20B, excluding new business potential: Damodaran

Digital payments and financial services firm Paytm's valuation is around $ 20 billion if the potential of its new business is excluded, according to US-based valuation expert Aswath Damodaran.

Damodaran, a professor specialising in finance at the Stern School of Business at New York University, values the unlisted shares of the IPO-bound firm at Rs 2,950 apiece.

In a blog dated October 4, Damodaran said on one side, there will be some who view a value of close to $20 billion (Rs 1.5 lakh crore) for a company with a pittance in revenues, a history of operating losses, and distracted management as insanity.

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"On the other side, there will be some who feel that I am not giving the company credit for all of the new businesses it can enter, using its vast platform of users, and thus, undervaluing the company.

"To both sides, my defence is that this is my story and valuation, and it will drive my investment," Damodaran said.

Paytm is learnt to be looking at a valuation of Rs 1.47 lakh crore to Rs 1.78 lakh crore as it plans to hit the bourses this month with a Rs 16,600 crore public offer.

"Needless to say, if I invested in Paytm, it would not only have to be at the right price, that is, trading at less than Rs 1,500 billion, but also with the acceptance that this cannot be a passive (buy and hold) investment, but one that will require active engagement and monitoring of the company's actions and performance," Damodaran said.

Paytm declined to comment on a query sent in this regard.