Those who got Paytm’s IPO shares have already lost over ₹2,600 on each lot that cost them ₹12,900

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Those who got Paytm’s IPO shares have already lost over ₹2,600 on each lot that cost them ₹12,900
BI India
  • Paytm listed at ₹1,955 on BSE, 9% lower than the issue price of ₹2,150.
  • It was clear from the price quoted in the grey market that the listing is likely to disappoint those who got shares allotted in the IPO.
  • Post listing, the shares went down further, shaving off over 20% of the IPO investment by 10:30 am.
Digital payments giant Paytm (owned by One97 Communications) listed on the stock exchanges 9% lower than the issue price of ₹2,150. It quickly slid to near ₹1,700 levels by 10:30 a.m.

This would mean that those who got shares alloted in Paytm’s initial public offering (IPO) lost over ₹2,600 on each lot of six shares that cost them ₹12,900. This wasn’t unexpected though.

The grey market went from paying a premium of ₹130 a share on the first day of the IPO to offering a ₹20 discount by the listing day. Hours before the listing Macquarie, a global investment bank, said that it expects the shares of Paytm to go down to as much as ₹1,200 in the next one year,

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The Noida-based Paytm listed at a market cap of ₹1,26,737 crore ($17 billion), which is nearly $3 billion lower than the $19.9 billion valuation if the public issue.

At that price, the 20-year old company was bigger than the biggest aluminium maker in India, the country’s largest biscuitsand confectionary maker, and many others. Of course, the price has now corrected but it is still a large company on its stock market debut.

Yet, fresh investors should not invest in Paytm at the moment but wait for another 15 days for the stock to consolidate, Kranthi Bathini, Director - Equity strategy at WealthMills securities, told Business Insider.

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“Serious investors need to wait for a couple of earning quarters and not jump into stocks like what happened in Nykaa,” he added.

Nykaa — which had a stellar debut on the stock market last week — crossed the ₹1 lakh crore market cap on the first day of listing. However, the company’s revenue declined to ₹1.2 crore in the July to September quarter, which is significantly lower than ₹27 crore it reported in the same quarter last year.

Paytm’s IPO was the biggest public issue India has ever witnessed and it surpassed Coal India’s public issue worth ₹15,000 crore in October 2010.

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About a third of Paytm’s IPO shares were undersubscribed until the second half of the third day of bidding before some institutional investors swept in and the IPO got a total subscription of 1.8 times the shares offered.

CompanyIssue SizeBids Received
Paytm*4.83 crore9.11 crore
Coal India63 crore147 crore
Nykaa2.64 crore216 crore
PolicyBazaar3.45 crore57.24 crore
Paras Defence71.40 lakh217.26 crore
Zomato2,751 crore71.92 crore
Source: Stock exchange
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