Paytm's stock fell on its first day after being the country's largest IPO
Paytm's stock is rated "underperform" by Macquarie, with a price target of Rs 1,200
Paytm's stock dropped as much as 26% in a shaky stock market debut on Thursday, just one week after the country's largest-ever IPO. On the NSE, the stock opened for trading at 1,950 rupees, down 9.3% or 200 rupees from its issue price of 2,150 rupees. Paytm's stock continued to fall after it opened, falling as much as 28% from its issue price to an intraday low of 1,560 rupees.
The following are ten things to know regarding Paytm's poor listing:
Last week, Paytm's 18,300 crore IPO, which was the country's largest, was 1.89 times subscribed. Paytm's stock started trading at 1,955 on the BSE.
Despite a drop in Paytm's stock on its initial public offering, the company was valued at over Rs 1 lakh crore.
The dip in Paytm's stock price on its first trading session was attributed to the company's high valuations, according to analysts.
Paytm's business model lacks "focus and direction," according to analysts at Macquarie Research, who commenced covering with an underperform rating. The company was described as a "cash guzzler" in the note, which stated that "achieving growth with profitability is a huge issue."
Paytm's initial public offering (IPO) included an 8,300 crore fresh issuance and a 10,000 crore offer for sale (OFS) by existing shareholders.
More than 100 institutional investors, including the Singapore government, received shares worth Rs 8,235 crore from Paytm ahead of the country's largest stock market debut.
According to a regulatory statement dated November 3, Paytm drew the interest of 122 institutional investors, who purchased more than 3.83 crore shares for 2150 each.
Paytm was launched in 2010 by engineering graduate Vijay Shekhar Sharma as a platform for cellphone recharges. Following ride-hailing business Uber listed it as a speedy payment option in India, the company developed quickly, and its use grew even further in late 2016 after a surprise ban on high-value currency notes boosted digital payments.
According to Forbes, Paytm's success has made Mr Sharma, a schoolteacher's son, a billionaire with a net worth of $2.4 billion. In a country where the per capita income is less than $2,000, its IPO has created hundreds of new billionaires.
Paytm's stock ended the day at 1,560, down 27%.