New Delhi: Paytm’s Rs 18,000 crore initial public offering (IPO) was faced with a weak debut after it received a decent response from investors. The largest IPO in the country vanished investors’ wealth by more than Rs 35,000 crore on day one of listing on Indian bourses.
In early hours into trade, Paytm’s valuation came down from a whopping Rs 1.39 lakh crore to Rs 1.07 lakh crore, a loss of about Rs 35,000 crore. The share is currently trading a 23% discount on its issue price of Rs 2,150 per equity share to hit its intra-day low of Rs 1,586.25.
Moreover, international brokerage firm, Macquarie, has begun its coverage on Paytm’s parent firm One97 Communications. However, that news could be heart-wrenching for the investors of the fintech company. Macquarie’s rating has initiated with an underperform rating while the brokerage firm has set a target of Rs 1,200 for the share, a 44% potential drop from the issue price of 2,150 per equity share.
Analysts at Macquarie Research said in a note to clients that Paytm’s business model lacked "focus and direction", according to a report by Reuters. "Achieving scale with profitability a big challenge," the note said, calling the company a "cash guzzler".Founded in 2010 by engineering graduate Vijay Shekhar Sharma, Paytm is one of the most popular payments platforms in India. The Noida-based startup offers several financial and banking services.
Paytm’s success has turned Sharma into a billionaire with a net worth of $2.4 billion, according to Forbes. Its IPO has also minted hundreds of new millionaires in a country where per capita income is below $2,000. But that number might come down as share prices slide further.