INDIA’S LARGEST IPO (preliminary public providing) floated by One97 Communications which owns Paytm disillusioned traders on Thursday with the shares closing at a reduction of 27.24 per cent to the problem worth of Rs 2,150 per share on the primary day of itemizing on the inventory exchanges.
Paytm bought listed at Rs 1,955, a reduction of 9 per cent, on the BSE and plunged to shut at Rs 1564.15, down by 27.24 per cent from the IPO worth. It hit the 20 per cent decrease circuit from the opening worth and buying and selling was stopped. Market participant mentioned an inflated valuation and a big float primarily contributed to the weak itemizing.
The firm launched its IPO on November 1 and concluded on November 3 with a worth band of Rs 2,080- Rs 2,150 a share. The dimension of the IPO was Rs 18,300 crore — Rs 8,300 crore via contemporary subject of fairness shares and Rs 10,000 crore via a suggestion on the market (OFS).
On the NSE, Paytm listed at Rs 1,950 and crashed to shut at Rs 1,560, down 27.44 per cent from the IPO worth. At the present worth, the agency’s market capitalisation works out to Rs 1,01,399 crore as towards expectations of Rs 1,40,000 crore market capitalisation on the subject worth. This means traders are poorer by practically Rs 39,000 crore on the itemizing day itself.
Institutional traders have additionally flagged issues with the corporate’s progress prospects contemplating the absence of a licence to enter the lending enterprise — one of many high profit-making verticals within the fintech house — and the presence of intense competitors within the segments Paytm operates. In a Thursday report, Macquarie Research mentioned Paytm’s valuation was “expensive” contemplating the worldwide benchmark of valuations being 0.3-0.5 occasions of price-to-sales progress ratio for fintech companies, Paytm valuation was 26 occasions for 2022-23.
Investors confirmed much less enthusiasm for the Paytm IPO – which oversubscribed 1.89 occasions, retail portion 1.62 occasions — when in comparison with the IPOs of another tech companies and unicorns. Zomato’s subject was oversubscribed by greater than 38 occasions and Nykaa’s by practically 82 occasions. Sigachi Industries IPO was subscribed by over 100 occasions and Latent View Analytics subject by 338 occasions. Stock analysts mentioned Paytm’s valuation has historically been determined by international traders with greater threat urge for food. Public markets in India at the moment are deciding it on the idea of standard profitability and earnings metrics, they mentioned.
At the itemizing ceremony, an emotional Vijay Shekhar Sharma, founder and CEO of Paytm, mentioned, “People tell me how do I raise money at such high prices, and I just tell them that I never raise money on the price, raise money on purpose.” “Man, I can feel for our cricket team! So many messages, wishes, & kind words. Feels like carrying the hopes and aspirations of young India to the Stock Market. From coal to a fintech, in 11 years – India has transformed. To every Paytmer, you’ve changed India for good,” he mentioned in a tweet.
Paytm’s weak itemizing additionally impacted the inventory market sentiment with the Sensex falling 372 factors to 59,636.01. “Weak listing of India’s largest IPO and soft global market amid rising inflation woes impacted domestic sentiment,” mentioned Vinod Nair, Head of Research at Geojit Financial Services.
