Shares of One 97 Communications, the parent of digital payment firm Paytm, made a weak stock market debut on Thursday. The stock opened for trading at Rs 1,950 on the NSE, marking a decline of 9.3 per cent or Rs 200 from its issue price of Rs 2,150. Paytm shares extended losses after opening as the stock fell as much as 23 per cent, from issue price, to hit an intraday low of Rs 1,655.
Here are ten things to know about Paytm’s weak listing:
Paytm’s Rs 18,300 crore IPO, which was the country’s largest, was subscribed 1.89 times last week. On the BSE, Paytm stock opened for trading at Rs 1,955.
Despite the dip in Paytm shares on debut the company clocked the valuation of over Rs 1 lakh crore.
Analysts pointed at Paytm’s expensive valuations as the reason behind the fall in stock price on its first trading session.
Analysts at Macquarie Research said in a note to clients that Paytm’s business model lacked “focus and direction” and initiated coverage with an underperform rating. “Achieving scale with profitability a big challenge,” the note said, calling the company a “cash guzzler”.
Paytm’s IPO consisted of a fresh issue of Rs 8,300 crore and an offer for sale (OFS) by existing shareholders worth Rs 10,000 crore.
Paytm allocated shares worth Rs 8,235 crore to more than 100 institutional investors, including the government of Singapore, ahead of the country’s largest stock market listing.
Paytm garnered interest from 122 institutional investors who bought more than 3.83 crore shares for Rs 2,150 apiece, according to a regulatory document dated November 3.
Engineering graduate Vijay Shekhar Sharma founded Paytm in 2010 as a platform for mobile recharges. The company grew quickly after ride-hailing firm Uber listed it as a quick payment option in India and its use swelled further in late 2016 after shock ban on high-value currency notes boosted digital payments.
Paytm’s success has turned Mr Sharma, a school teacher’s son, into a billionaire with a net worth of $2.4 billion according to Forbes. Its IPO has also minted hundreds of new millionaires in a country where per capita income is below $2,000.
As of 10:46 am, Paytm shares traded 22 per cent lower from issue price at Rs 1,676.