Shares of One 97 Communications Ltd1 (Paytm) made a ‘tepid’ listing as anticipated by the analysts and Zee Business Managing Editor Anil Singhvi.
Shares of One 97 Communications Ltd1 (Paytm) made a ‘tepid’ listing as anticipated by the analysts and Zee Business Managing Editor Anil Singhvi. Stocks of India’s biggest initial public offer (IPO) ever, Paytm was listed on the Bombay Stock Exchange (BSE) at 9% discount on Thursday. Paytm stocks opened at Rs 1,955 per share against its issue price of Rs 2,150 on BSE on Thursday. This was decline of 9.07% or Rs 195.
Largely analysts and brokerages have predicted a weak debut for Paytm, citing it a cash-burning business model and stating that Internet/digital startups are not about profit or revenue. They have also highlighted how it is a loss-making company currently with a loss of Rs 4,230.9 crore in FY19, which was reduced to Rs 1,701 crore in FY21.
On the day of the listing, global financial services group Macquarie has downgraded its rating to ‘underperform’ and gave a target price of RS 1,200. “Paytm’s business model lacks focus & direction. Achieving scale with profitability is a big challenge. The company is a cash guzzler. Besides, regulations and competition are added worries for this firm,” Macquarie said in its report.
Divam Sharma, Co-founder of Green Portfolio
Divam Sharma, Co-founder of Green Portfolio, SEBI-registered Portfolio Management Services, had also expected a flattish to 10% listing gains for Paytm.
“Investors, who got allotment, should be looking at Paytm as a long-term allocation. This is a high growth story, which still has miles to go. Their leadership in payments and diversification towards ecommerce, cloud services and financial services should ensure high growth for the company in the coming years. That said, support from the capital raised in this IPO, and from large institutional capital, including global pension funds and government funds, will ensure adequate growth support for the company in the coming years,” highlighted Divam Sharma.
Santosh Meena, Head of Research, Swastika Investmart Ltd