Shares in online payment platform giant PayTM fell as much as 26 % in their market debut, minutes after debuting on the stock market as India’s biggest ever Initial Public Offering (IPO). The shares opened for trading at ₹ 1,950 on the National Stock Exchange (NSE), at a decline of 9.3 per cent or ₹ 200 from its issue price of ₹ 2,150. The share price further dipped to hit an intraday low of ₹ 1,586.
PayTM’s ₹ 18,300 crore IPO was India’s biggest IPO ever and was subscribed 1.89 times last week. The IPO of PayTM’s parent company One97 Communication was launched on November 1 and concluded on November 3 and had a price band of ₹ 2,080 – ₹ 2,150 per share. On Bombay Stock Exchange (BSE), the same opened for trading at ₹ 1,955.
Founded in 2010 by Engineering graduate Vijay Shekhar Sharma, PayTM was first developed as platform for online mobile recharge. However, soon it was used as payment gateway by cab aggregator Uber which fuelled its growth exponentially in India. PayTM’s IPO consisted of a fresh issue of shares worth ₹ 8,300 crore and an offer for sale (OFS) by existing shareholders worth ₹ 10,000 crore. However, despite the dip on listing price, PayTM managed to clock in the valuation of over Rs 1 lakh crore.
As per analysts, the reason behind fall in the share price on listing day could be PayTM’s expensive valuation. Brokerage firm Macquaire Research has written a note to its clients that PayTM’s business model lacks ‘focus and direction’ and initiated coverage with an ‘underperform rating’. “Achieving scale with profitability a big challenge,” the note by the brokerage firm sand and called the company a “cash guzzler”.