Paytm’s lacklustre debut
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 and that saw double-digit oversubscription.
Brokerage firm Macquarie Research cut’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.
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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.
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"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.”