Despite the low market sentiment, Paytm shares began trading on stock markets at a discount to the IPO price. The fintech behemoth’s shares began at Rs 1,955 per share, down Rs 195 or 9.07 percent from the issue price of Rs 2,150 per share. Paytm extended its losses minutes into trading, plunging more than 16 percent from the IPO price to trade around Rs 1,790 per share. The Rs 18,300 crore IPO by Paytm is the largest ever on Dalal Street. Investors had a mixed reaction to the issue, with institutional buyers and individual investors oversubscribing their portions while NIIs were unable to fully subscribe to theirs.
Analysts encourage investors to take any profits on the business’s initial public offering and exit the stock while they wait for better entry opportunities. The lofty valuations of Paytm have sparked a lot of concern. Paytm, which has a market valuation of Rs 1.26 lakh crore, has yet to earn a profit, which has been a source of discussion among experts. Over the next few years, the Ant-Group-backed company is likely to continue to lose money.
Paytm began as a digital wallet platform that allowed clients to make utility payments and cell recharges using the app. It has since evolved into a payment super-app that also provides wealth management, e-commerce, insurance, credit, and other services. Payment banks may be allowed to apply for small finance bank (SFB) registration, according to an RBI internal research, allowing Paytm to lend on its own balance sheet, according to domestic brokerage company Motilal Oswal in a report. Around 75% of the company’s overall income comes from payments and financial services.
Earlier this month, investors subscribed to Paytm’s public offering 1.89 times. Qualified Institutional Buyers (QIB) had subscribed 2.79 times their portion of the issue, while individual investors had subscribed 1.89 times their stake. Only 0.24 times had non-institutional investors (NII) subscribed to their portion.