Paytm, one of India’s biggest digital payment platforms failed to show its magic on the day of its debut at the stock market as its share crashed 27 per cent. Going by the data, IPOs of companies with issue size above Rs 1,000 crore in the last 15 years, Paytm’s IPO which was the country’s largest-ever in the corporate history, saw the biggest crash on a listing day.
Before Paytm, Cafe Coffee Day’s parent company Coffee Day Enterprises’ stock had tumbled the highest (17.6 per cent from its issue price) on its listing day in November 2015. In 2008, Anil Dhirubhai Ambani Group-owned Reliance Power too had started its journey at the stock market with a 17.2 per cent fall from its issue price.
Besides Paytm, Coffee Day and Reliance Power, the IPOs list of companies with the issue size of over Rs 1,000 in the last 15 years that saw biggest losses on the listing day include ICICI Securities (14.4% in March 2018); Cairn India (over 14 per cent in December 2006); UTI AMC (14 per cent in September 2020); Kalyan Jewellers (over 13 per cent in March 2021); Bharti Infratel (over 13 per cent in December 2012); Indiabulls Power (12.8 per cent in October 2009); and ICICI Prudential Life Insurance (nearly 11 per cent in September 2016).
Shares of One97 Communications Ltd, Paytm's parent company, on November 18 made a weak market debut and tumbled over 27 per cent from the issue price of Rs 2,150. The stock is listed at Rs 1,955, tumbling 9 per cent from the issue price on the BSE. During the day, it tumbled 27.25 per cent to Rs 1,564. It tanked 27.24 per cent to settle at Rs 1,564.15. On the NSE, it debuted at Rs 1,950, registering a decline of 9.30 per cent against the issue price. The stock plunged 27.44 per cent to settle at Rs 1,560.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said that investors are questioning its business model and lack of profits along with lofty valuations.
Santosh Meena, Head of Research, Swastika Investment, said that Paytm's secondary market debut was weaker than the expectations of a flat listing.
Nikhil Aggarwal, Co-founder & CEO, Grip Invest said that if there is anything investors can learn from the recent IPOs is that people should consider new-age fixed investments like lease financing and others. This will help diversify and balance investors' portfolios and provide them handsome returns.
Parth Nyati, Founder, Tradingo said that the issue got subscribed only 1.89 times from the investors which was much lower compared to the other recently listed companies. He added that they feel that due to the brand the company sought high valuation and it might see a correction in the near term.
"Investors who are stuck should wait as there is small buying being seen once, one may expect consolidation around the price of Rs 1200-1350 which can be a buying opportunity considering base formation. Hold for a few quarters and wait for expected results. This might trigger some buying action," Manoj Dalmia, Founder and Director, Proficient Equities, said.
"Paytm share prices would remain subdued and weak for some more time. Investors should be cautious and enter only when sentiments turn around," Ravi Singh, Head of Research & Vice President, ShareIndia, said.
Ravi Singhal, Vice Chairman at GCL Securities said that Paytm shares are still looking weak. Those who have Paytm shares in their portfolio are advised to take bounce back, if any, as an opportunity to exit and enter again at around Rs 1,000 to Rs 1,100 for at least 12-15 months target of Rs 2,150.
Notably, Paytm's Rs 18,300 crore IPO was oversubscribed 1.89 times. This was greater than miner Coal India's Rs 15,000 crore offer a decade back. The initial public offering had received bids for 9.14 crore equity shares against the offer size of 4.83 crore shares, according to information available with stock exchanges. Paytm had fixed its IPO in a price band of Rs 2,080-2,150 per share.
Incorporated in 2000, One97 Communications is India's leading digital ecosystem for consumers and merchants.