Paytm’s lacklustre debut

Good Morning,

You can love it, you can hate it, but you can't escape it.

That was the sentiment in the Indian markets and the startup landscape on Thursday as One97 Communications, Paytm’s parent company, marked its debut on the Indian stock exchanges at a 9 percent discount to its final IPO pricing.

The stock — at an issue price of Rs 2,150 — opened on the NSE at Rs 1,950 and the BSE at Rs 1,955. By around 11:18 am, prices were down by as much as 22.5 percent. During the day, the stock plunged further and closed at Rs 1,560, over 27.4 percent below the issue price. 

Compared to a lot of recent startups that have made their way to the capital markets, Paytm's IPO saw a tepid response from investors. It was subscribed just 1.89 times, versus the likes of Nykaa and Zomato that saw double-digit oversubscription.

Brokerage firm Macquarie Research cut Paytm’s target price by 40 percent from its issue price to Rs 1,200 apiece. 

It said, "Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view. Unless PayTM lends, it can’t make significant money by merely being a distributor. We, therefore, question its ability to achieve scale with profitability.”

Paytm's IPO comprised a fresh issue of equity shares worth Rs 8,300 crore, and an OFS (offer for sale) by existing shareholders such as Ant Financial, Alibaba, Elevation Capital (Saif Partners), and Founder Vijay Shekhar Sharma worth Rs 10,000 crore.

The Interview

How can D2C brands approach global expansion? What are the challenges and opportunities for Made in India brands? And what kind of solutions are available for them to build, grow, and scale their exports business?

Listen to this panel comprising leaders from Amazon, D2C entrepreneurs, and investors who decode the road ahead.

Editor’s Pick: App Friday

If you follow Thalaivaa Rajinikanth on Twitter, you would have noticed that most of his tweets are now audio clips via Hoote, an app founded by his daughter and entrepreneur Soundarya Rajinikanth and Sunny Pokala. 

Launched in October this year, Hoote is a multilingual app that allows anyone who wants to be heard to express themselves in their own voice and in the language of their choice. Read more.

Startup Spotlight

Preparing students for the 21st century workplace

Mumbai-based startup X Billion Skills Lab has curated a B2B2C ‘non-technical’ skills programme for graduates, especially in Tier II and III cities, to help them learn soft skills. It has partnered with over 50 colleges and claims to have over one lakh learners signed up to date.

Incorporated in 2017 by serial entrepreneurs Samyak Chakrabarty and Gaurav Jain, the startup is expecting a 120 percent CAGR and a compounded weekly growth rate of 180 percent in the next four months. Read More.

News & Updates

• Online travel platform EaseMyTrip continues to aggressively expand its hotel and holiday businesses with Spree Hospitality acquisition, its second such deal. 

• Small Industries Development Bank of India (SIDBI) has partnered with Google India Pvt Ltd (GIPL) for piloting a social impact lending programme with financial assistance up to Rs 1 crore at subsidised interest rates to micro, small and medium enterprises (MSMEs).

• At the seventh edition of Google for India, the tech giant announced several new product features and partnerships in the country aimed at extending the benefits of India’s growing digital economy to more people. 

Before you go, stay inspired with… 

"If you are an entrepreneur who's trying to make a new vehicle, I would ask you why will I invest in you? The answer should always be I can do it faster and cheaper. Only then you will be able to find a lot of people investing in you.” 

— Arpit Agarwal, Director, Blume Ventures

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