Paytm shares plummeted as low as 26 percent in just a day after its stock listing. Paytm’s initial public offering (IPO) on the stock exchange markets was one of the crowning achievements in the company’s transformation from a startup to a prominent payments services platform in India. Paytm was listed on the Bombay Stock Exchange and the National Stock Exchange on November 18, 2021, after its most extensive initial public offering (IPO) in a decade.
While the Paytm group as a whole was enjoying the listing event, the paytm shares price was plummeting. Paytm’s stock price on the stock markets was Rs 1950, which was 9.3 percent lower than the company’s initial public offering (IPO) price of Rs 2150.The decline in the stock price continued on the second day as well, with the stock price plummeting to as low as 26 percent.
Because of Paytm’s slight and relative lack of success compared to other recent successful public offerings such as Nykaa, Zomato, and Policy Bazar, many stock market professionals were not surprised by the company’s lackluster performance on the BSE and the NSE. Nykaa’s initial public offering (IPO) grabbed headlines attributed to its outperformance, which resulted in its founder Falguni Nayar becoming a billionaire overnight.
Paytm’s dismal performance on the stock market, particularly when a large number of angel investors are putting their money into Indian companies, came as a surprise to many who purchased the paytm shares. A shaky start for Paytm, according to its founder Vijay Shekhar Sharma, has been a source of disappointment for him. He went on to say that it was just the first day and that he had high hopes for the future.
Paytm’s first public offering (IPO) valued at Rs 18,300 crore was oversubscribed by just 1.95 times, much lower than the interest created by other public offerings such as Zomato and Nykaa. While it is true that Paytm’s first public offering (IPO) was far more significant in scale, several experts expressed concerns about the IPO’s price, profitability, and long-term prospects.
The following aspects are believed to be a cause of Paytm shares’ poor performance on the stock markets.
Poor IPO Subscription.
Paytm’s first public offering (IPO) got a much lower reaction than other recent IPOs that saw strong stock market debuts. The company’s initial public offering (IPO) had a lackluster response on the first two days and was only marginally oversubscribed on the final day.
However, unlike Zomato, Nykaa, and other smaller companies, the payments firm’s first public offering (IPO) did not get a favorable response from the public market. Consequently, Paytm’s underwhelming reaction to its first public offering (IPO) seems to be one of the causes contributing to the company’s lackluster stock market debut.
Over Priced Value Of Paytm Shares
The pricing range for Paytm’s first public offering (IPO) was determined at Rs 2,080-2,150 per share, with the business valued at $1.39 trillion at the higher end of the price range.
Various investment firms had voiced concern about the paytm shares price, claiming that it was costly in their opinion. The reason for their belief is tied to the financial situation of the organization. While the firm has been able to reduce its losses and diversify its primary business, it has not yet generated a profit.
Macquarie Research’s Critical Report
According to research published by the firm, Macquarie Research experts recently concluded that Paytm’s business strategy lacked concentration and direction. The target price for the stock was maintained at Rs 1,200 by the experts. Suresh Ganapathy and Param Subramanian of Macquarie Research wrote the research, which was published on Tuesday.
With the rapid growth of UPI payments, PayTM’s dabbling in various business lines prevents it from becoming a category leader in any area, except for wallets, which are becoming more insignificant. We believe that competition and regulation will push unit economics and growth prospects down in the medium term,” the brokerage said in the research.
The CEO of Vijay Shekhar Sharma responded to the Macquarie Research analysts’ report by saying, “I would want to emphasize that our business strategy is solid and powerful.” It’s been an up and down day. I wish things might have gone better, but overall, it hasn’t been a very horrible day. It is a historic day for both India and us. I’d tell you to hang in there because I’m fighting for you with all my heart.
We hope that the outcomes of the next several quarters will instill much greater confidence and faith in everyone. At the same time, I want to express my gratitude for your trust and confidence in Paytm, which allows us to be there for you.’ Vijay Shekhar Sharma went on to say more.