HomeBusinessPaytm shares plunge 75%, world's worst in a decade amid big IPOs

Paytm shares plunge 75%, world’s worst in a decade amid big IPOs

Paytm shares plunge 75%, world's worst in a decade amid big IPOs

Paytm’s 75% drop is worst in the world for a large IPO in a decade

One97 Communications Ltd., the operator of India’s biggest digital-payments provider known as Paytm, has just pulled off its worst first-year decline among big IPOs in the past decade — and the pain is getting worse. .

The company, whose founder compared its challenges to those faced by Tesla Inc. shortly after The listing saw its stock wipe out 75 per cent of its market value a year after the $2.4 billion offering, the largest ever recorded in India at the time.

The plunge is the biggest first-year plunge globally among IPOs that have raised at least the same amount since Spain’s Banquis SA plunged 82 per cent in 2012, data compiled by Bloomberg show.

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Paytm’s grim first anniversary underscores the erosion of confidence in its ability to become profitable after launching at a time when India’s IPO market was enamored with tech startups. It is one of those startups that listed with valuations seen by many as overpriced.

The stock’s losses have deepened this week amid concerns over the emergence of a potential competitor owned by India’s biggest conglomerate.

Last week, Japan’s SoftBank Group Corp. shares sold This was held in Paytm as the lock-up period stipulated in the IPO, which promotes a three-day slide.

The 30 per cent fall in November has brought down the IPO price by 79 per cent from Rs 2,150.

take root

Tech stocks sold off globally as investors dumped loss-making firms amid a deteriorating macroeconomic environment, analysts at JM Financial Ltd, led by Sachin Dixit, wrote in a note this week.

“This response has been well received by company management and we are seeing all Indian internet companies prioritizing not only profitability but also a clear path forward,” he wrote.

Shares of Paytm were sold at the top of a marketing range following an offering that attracted strong demand from individuals and funds, though they never traded above the listing price.

The sale made BlackRock Inc. and attracted traditional global stock pickers such as the Canada Pension Plan Investment Board.

“Every rally the market gets a little over-bullish about something,” said Shreedutt Capital, head of equity, Canara Robeco Asset Management.

“In 2006-2008, we were very bullish on construction companies and capital goods companies. In 2013-14 we were a bit too bullish on midcaps. In 2017-2019 we were very bullish on NBFCs And in 2020-2022 people were very excited about the technology.

“Some of these companies have good business models,” he said, “yet, you don’t seem to have enough margin of safety because these businesses are evolving.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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