What happened to Paytm on listing day and what experts have said about it

Paytm’s listings on the stock market received a tepid response on Thursday as the shares of its parent company, One97 Communications Limited, fell significantly on listing day. This comes after Paytm founder Vijay Shekhar Sharma was seen shedding tears as he addressed the BSE on Thursday. Money Control quoted him as saying, “People tell me how do I raise money at such high prices, and I just tell them that I never raise money on the price, raise money on purpose." Hours before the market listing, Sharma had said on Twitter, “Man, I can feel for our cricket team! So many messages, wishes, & kind words. Feels like carrying the hopes and aspirations of young India to the Stock Market. From coal to a fintech, in 11 years - India has transformed. To every Paytmer, you’ve changed India for good.” What exactly happened? The share prices of Paytm fell by 27.25 percent. While the issue price was Rs 2,150, it fell to Rs 1,564 by the time the markets closed. The stock was listed for Rs 1,955 on the Bombay Stock Exchange (BSE) when markets opened on Thursday, at a 9 percent discount. The company was listed at Rs 1,950 and closed at Rs 1,560 on the National Stock Exchange of India. This was a dip of 27.44 percent that its IPO price. Paytm was India’s largest initial public offering that had raised Rs 18,300 crore from investors earlier this month on November 8. However, Sharma said he was not bothered by his company losing a fourth of its fortune. Bloomberg quoted him as saying, “I’ve never felt more excited, optimistic and enthusiastic about the future. The slump is no indicator of the value of our company.” Why did this happen? Even as Paytm headed for a market debut, experts were worried as Paytm is a loss-making company. In the last financial year Paytm had losses worth Rs 1,701 crore in the previous financial year. The Hindu Business Line quoted Deven Chokey, managing director of the KR Choksey Investment Managers as saying, “It is a lesson for everybody including investors and regulators. Valuations are the key for any investment and one should ignore the hype and frenzy. A pre-IPO valuation report for companies should become the norm since market regulator SEBI is also allowing loss-making companies to tap the market unlike earlier when only those having a three-year profit track record could go for an IPO.” Research house Macquarie had said that Paytm’s business lacks “focus and direction” and said that dabbling in multiple business lines prevented the company from becoming a category leader in any category. Money Control quoted the research house as saying, “Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view.” Mahindra Group chairman Anand Mahindra said his heart went out to Paytm, but hoped that the “sobering debut” will “ moderate the casino-like feeding frenzy for IPO listings & help restore the hunt for true value”.