Paytm’s IPO has emerged as the biggest flop in the business market. At around Rs. 56,233 crores of Paytm’s market value has declined after a disastrous market debut on Thursday, 18 November.
BSE data further showed that Paytm shares have plunged as low as 40% from its IPO price to go on to a lower value of Rs 1,283 in just two trading sessions. Analysts have stated that high valuations could be the reason for the descending Paytm stock price.
Paytm’s share sale that was initiated via IPO, had ended on 10 November had a sluggish response as the stock issue was slowly subscribed 1.89 times in comparison to Nykaa's subscription of 82 times and 38.25 times of that of Zomato’s.
Paytm’s shares during the Monday trading session hit an even low coming to around 18% on the top listing day that decreased to 27%.
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A record IPO amount of Rs 18,000 crore was raised by One 97 Communications Ltd, the parent company of Paytm. However, its disastrous trading debut fired up criticism, the firm and its investment bankers may have forced it too hard in the offering.
In a constant, Founder and Chief Executive Officer Vijay Shekhar Sharma had in his statement said that he wanted Paytm to override the long-standing IPO record that was set by Coal India in the year 2010.
Meanwhile, during the weekend Paytm has released its financial details for October 2021, which contains a crucial period coming ahead of the Diwali holiday. The gross merchandise value for the month of October had increased to 131% to ₹ 83,200 crores, the company stated.
Analysts believe loan payout can play a key to Paytm in turning into a profitable business which rose to over 400 per cent to ₹ 627 crores.
The topple in India’s biggest digital-payments provider may discourage the stock-market growth, while the IPO is a promoting symbol, a destination for global capital, especially for those investors who are looking for an alternative to China to invest.
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Leading banks such as Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., ICICI Securities Ltd. and Axis Capital Holdings Ltd had managed Paytm’s IPO and have not commented yet on it being a failure.
Paytm’s business model lacked "focus and direction", said Analysts at Macquarie Research in a note to its clients. The note further said, "Achieving scale with profitability is a big challenge.” It also calls the company a "cash guzzler". As of Thursday noon, the company’s shares traded at 17.57 per cent below at ₹ 1,289.35, leading the Sensex to collapse which was down 1.63 per cent.