Paytm IPO Listing: Paytm shares saw a anticlimactic debut on the Dalal Stree on Thursday, November 18 as the Paytm IPO got listed at the stock market. Paytm share opened at Rs 1,955 on Bombay Stock Exchange, a decrease of 9.07 per cent discount over the higher end of the issue price of Rs 2,150 per share. The shares further dipped to Rs 1,806.65 minutes after 10 am, which is a decrease of 15.97 per cent at the BSE. At the National Stock Exchange, the opening price was at a discount of about 10 per cent at Rs 1,950 on the day. At the NSE, too, the Paytm shares dipped further post 10 am.
Digital payments platform Paytm’s parent company One97 Communications, which floated its maiden public offer days back, made a rather disappointing debut at the Dalal Street amid tepid response from buyers. The Paytm IPO opened for subscription from November 1 to 3. The payments platform fixed the price band of the issue at Rs 2,080 – 2,150 per share. The company has said that it plans to raise Rs 18,300 crore from the issue. The offer was a combination of fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore by selling shareholders including founder and investors.
One97 communications, the parent company of Paytm, received bids for 9.14 crore shares against 4.83 crore shares offered for sale. Qualified institutional buyers subscribed 2.79 times the portion reserved for them, while retail buyers bid 1.66 times the part set aside for them. Non-institutional buyers booked 24 per cent of the shares kept aside for them.
The Paytm IPO had been subscribed 1.89 as of its final day of bidding, according to data from stock exchange. The company’s stocks were trading at Rs 2,300 on October 7 at the grey market, which is a Rs 150 or 7 per cent premium over the final issue price, but fell to Rs 80 on the opening date of the IPO. On the closing day of the issue, the Paytm IPO GMP fell to as low as Rs 40. A day before the listing, Paytm IPO GMP fell to its lowest at Rs 30, lower than the other initial public offers of companies available at the grey market.
Despite all this, analysts had called it a tepid response, given the huge hype about Paytm and its IPO. Analysts said that the response was tepid as compared to the other IPOs like Nykaa and Policybazaar which got listed or issued recently. The Nykaa IPO was oversubscribed by more than 80 times and QIBs subscribed to their portion by 91 times. The Policybazaar IPO was subscribed 16.5 times, largely amid strong response from QIBs.
“The IPO of Paytm got a tepid response from investors compared to other startup IPOs like Nykaa, Zomato, etc. Expensive valuations and continuous losses made investors wary. Road to profitability too looks challenging. The after-effect of tepid subscription may be seen on listing. I am expecting a flat to very marginal listing in Paytm,” said Abhay Doshi, founder of pre-IPO and unlisted shares platform UnlistedArena.com.
Analysts had earlier given positive reviews about the Paytm IPO, calling it profitable for the long term. “At higher price band of Rs. 2,150, it is demanding an EV/Sales multiple of 46.1x, which seems to be stretched. The demanded valuation is also at significant premium to China’s Ant Group proposed IPO in 2020. Thus considering the growth potential and stretched valuations, we assign “subscribe for long term” rating for the issue,” said Choice Broking.
This was despite One97 Communications reported a total loss of Rs 1,701 crore for the year ended March 2021, against the loss of Rs 2,942.4 crore in FY20, as well as a loss of Rs 4,230.9 crore in FY19. Consolidated income during the year FY21 declined to Rs 3,186.8 crore, from Rs 3,540.7 crore in FY20 and Rs 3,579.7 crore in FY19.
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