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Paytm crashes on Day 2 too, down 37% since IPO

1 week ago 7

MUMBAI: Shares of Paytm fell by 13% on its second trading day, after crashing 27% during their Thursday debut on the stock exchanges. The shares closed at Rs 1,360, 37% below the issue price of Rs 2,150. At Monday’s closing price, the company’s market capitalisation stood at Rs 88,185 crore compared to the valuation of nearly Rs 1.4 lakh crore in its IPO — which means shareholders have lost about Rs 51,000 crore in two trading days.
Shares of the payments company opened at Rs 1,500 on Monday, down from its previous close of Rs 1,564. Around noon, when the company hit a low of Rs 1,271 and was inching towards its 20% lower circuit band, there was buying support that lifted it to the closing level of Rs 1,360.

Investors who have supported the Rs 18,300-crore IPO include BlackRock and the Canada Pension Plan Investment Board.
The dismal performance of the company on the bourses was met with shock from investors. On social media, investors were looking for answers on why a company that received backing from blue-chip institutions and was subscribed 1.8 times tanked upon listing. This happened even as other startups such as Nykaa, Zomato and Policybazaar showed resilience after listing. The issue was managed by top global and Indian investment banks. Morgan Stanley, Goldman Sachs Group, Axis Capital, ICICI Securities, JPMorgan Chase, Citigroup and HDFC Bank were the book-running lead managers.
The company’s shares tanked even after it released data on Sunday where it said that both the gross merchandise value of transactions and lending activity in the second quarter saw a big jump. Macquarie had initiated research on Paytm, releasing a report on the day of its listing with a target price 40% below the issue price.
On Monday, responding to the new business numbers, Macquarie said in a report, “While GMV has grown 112% year-on-year, it is dominated by UPI (66% in FY21, according to our estimates), where Paytm earns zero-MDR (merchant discount rate). We see UPI share climbing up to 85% by FY26E (estimated). Hence, we do not see the strong reported GMV growth materially affecting our P&L estimates. Paytm reported revenues of Rs 890 crore in Q1 in its prospectus, and we maintain our FY22E revenue estimate at Rs 4,500 crore for Paytm. Also, we won’t extrapolate October 2021 numbers because they were influenced by strong festive sales.” It added that Paytm’s loan distribution numbers are below estimates.
Veteran banker Uday Kotak quickly corrected a tweet of a social media user accusing Kotak of being part of bankers who, according to the user, mispriced the issue. “Please get your facts right. Kotak did not manage Paytm. Kotak did lead-manage Zomato at issue price Rs 76 (current market price Rs 150), Nykaa at issue price Rs 1,125 (current market price Rs 2,100),” Kotak said in a tweet.
Ashneer Grover, founder of Bharat Pe which competes with Paytm for merchant acquisition, said in an interview to an online portal that that company disrupted the market by selling stock of Chinese investors through an IPO to return their money.

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