One97 Communications’ (PAYTM) IPO disappoints on debut
By Vinu Lal
11:52, 18 November 2021
Indian digital payments platform provider One97 Communications, known for its brand Paytm, closed its first day of trading with a hefty discount of 27% from its initial offer price, exchange data showed. This was by far India’s largest initial public offering (IPO) after raising INR183bn ($2.5bn) last week.
Stock in One97 Communications opened at INR1,950 on the National Stock Exchange (NSE), down 9.3% from its issue price of INR2,150. It fell further by 26% to hit an intraday low of INR1,586.
On Thursday, a total of 23.95 million shares were traded on the NSE, taking the company’s total market capitalisation to INR1.01trn. The company’s shares closed down 27.40% at INR1,560.80.
Response to IPO was tepid, says analyst
“Paytm, the biggest IPO in India so far debuted the secondary market on a weaker note as compared with our expectations of a flat listing, ” said Santosh Meena, head of research at Swastika Investmart. “The company has a huge customer base with strong brand positioning and it has an early mover advantage in digital payment services, however, it is still a loss-making company and very aggressively priced, therefore, we saw a tepid response in terms of subscriptions.
“I would suggest only aggressive investors hold this stock for the long term amid uncertainty where I believe Bajaj Finserv is a much better option to play on Fintech businesses because Bajaj Finserv has a proven track record with great comfort of valuations compared to Paytm.”
Company is still a digital leader
According to Dhianu Das, founder of angel investors network Agility Ventures: “The public should not get misled. It is a great opportunity for short-term investors. The buying price too is down and so chances of profiteering would also be more as shares go up, and we believe it will. The company’s debut in the stock market should be taken positively by the investors as the company is still leading in providing a digital ecosystem to people in the country.”
One97 Communications, which was planning to raise INR166bn, had hiked the amount to INR183bn, following an increased investor interest, according to a report by Moneycontrol.com.