On the very first day of its listing in the stock market, Paytm witnessed the sharpest ever fall of any stock on its listing day in the last one decade. The stock price of Paytm, formally known as one97 Communications, tanked by 27% on Thursday.
Paytm had put out its Initial Public Offering (IPO) price for each share at over Rs 2,150, but the stock was listed in the stock market with a 9% loss on Thursday morning when the markets opened. The stock, when listed in the morning, could not even cross the Rs 2,000-mark and was listed at a price of Rs 1,955 at the Bombay Stock Exchange (BSE).
As the day progressed the stock prices of Paytm kept on falling only to settle at a loss of 27.25% when the market closed at about 4 pm on Thursday. Paytm’s stock price settled at the end of the day at Rs 1,564.15.
At the end of the day on Thursday, Paytm’s market capitalisation was eroded by one third as compared to its market capitalisation during the time when the company was listed for IPO. Paytm through the IPO was hoping to raise about Rs 1.50 lakh crore, but instead took a major hit at the stock market.
Analysts and market observers say that the high valuations of the stock, tough competition in the digital payments sector, consistent loss in the last financial years and a much less than expected subscription to its IPO are some of the key factors for the below average listing of Paytm stocks in the market.
Paytm’s IPO did not see many takers against the hype it had created with its IPO. Paytm›s Rs 18,300-crore offer was subscribed only 1.89 times. Qualified institutional investors bought shares only 2.79 times the reserved portion and retail investors› portion was booked 1.66 times, while non-institutional investors did not show great interest in the offer as their portion was subscribed only 24%.
Soon after the Paytm stocks were listed with a 9% loss, social media was abuzz with netizens talking about how overvalued the stocks of Paytm were and many even complained of the over enthusiasm the company had been showing ever since it had received one of the largest market capitalisation approvals from SEBI, the stock market regulator.
However, Paytm is the largest payments platform in India with a gross merchandise value (GMV) of Rs 4.03 lakh crore in FY21, having an overall mobile payments transaction volume market share of approximately 40%, and wallet payments transaction market share of 65-70% in India as of FY21.