January 27, 2023

Great Indian Mutiny

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Shares of Paytm in India fell 24% on its stock market launch

File Image: This illustration taken on July 7, 2021 shows the interface of Paytm, an Indian payment platform, in front of its logo. REUTERS / Florence Lo

Por Nupur Anand

MUMBAI, Nov 18 (Reuters) – Shares of India’s Paytm plunged 24% in the first day of trading and investors have questioned the loss-making business model of digital payments to end the largest IPO in the country’s history.

The stock traded up by Rs. 1,645 were traded at a starting price of Rs. 2,150, while the value of the ant group support company was about Rs. 1.07 trillion ($ 14.4 billion).

If it falls to 1,560, it will hit a 20% trade high, at which time trading will stop for the day.

Barth Niyadi, founder of Indian trading platform Tradingo, said, “Paytm is in short supply and there is no indication that it will be profitable in the future.

Paytm counts SoftBank among its supporters, raising $ 2.5 billion in its initial public offering, of which $ 1.1 billion came from institutional investors. Last week, it received $ 2.64 billion worth of offers for the remaining shares issued, or 1.89 times more than demand.

Macquarie Research analysts said in a note to customers that Paytm’s business model is starting to hedge on a “low weight” rating due to a lack of “focus and direction”. “Achieving large-scale profits is a big challenge,” the note said of the “money eater”.

Many market participants see the stock fall early, a sign that investors have lost momentum following the recent series of upscale IPOs.

Sandeep Sabarwal, a Mumbai-based investment adviser, said Paytm’s IPO initial offer could put an end to tough prices in the markets, adding that many companies did not have a clear path to profitability.

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Vijay Sehgar Sharma, an engineering graduate, founded Paytm in 2010 as a mobile charging platform.

Paytm grew rapidly after transport company Uber added it as a fast payment option in India, and its use increased further in late 2016, with the ban on high-value tickets in New Delhi raising digital tariffs.

Paytm’s success has turned a schoolteacher’s son into a billionaire with a net worth of $ 2.4 billion, according to Forbes. Its IPO is the origin of hundreds of new millionaires in a country with a per capita income of less than $ 2,000.

($ 1 = 74.3550 Indian Rupees)

(Information from Nupur Anand in Mumbai, Sankalp Partial in New Delhi and Vishwata Chander in Bangalore; Additional information by Chandni Monnappa, Abiru Roy and Savio Shetty; Edited by Edwina Gibbs; Translated by Tario Fernandes)