Hype doesnt help: Analysts blame high valuation for Paytm plunge on debut

Paytm, the digital
platform owned by One97 Communications Ltd, had a near-nightmarish debut on the
bourses Thursday as share prices plummeted close to the Rs 1,500-mark from the
issue price of Rs 2,150, marking nearly a 28% drop. The stock was listed at Rs
1,955, slipping 9% from the issue price on the BSE.

On the NSE, Paytm debuted
at Rs 1,950, registering a 9.30% drop against the issue price and saw the stock
plunge 27.34% to Rs 1,562. By late afternoon, the company commanded a market
valuation of Rs 1,01,484 crore on BSE.

Also Read | Paytm listing on BSE, NSE: Carrying young India’s hopes to stock market, says chief

Formally known as
One97 Communications, Paytm is backed by the Ant Group. The company’s IPO was
oversubscribed 1.89 times on the last day of India’s biggest share sale last
weak surpassing Coal India’s Rs 15,000 crore offer a decade ago.

The initial public
offering of Paytm’s parent firm received bids for 9.14 crore equity shares
against the offer size of 4.83 crore shares, according to information available
with stock exchanges and reported by PTI. Paytm had fixed its IPO in the Rs
2,080 to Rs 2,150 price band.

Also Read | Paytm makes weak market debut, shares fall over 25%

A section of
analysts believe that the company brand sought high valuation and might see a
correction in the near term.

Vijay Shekhar
Sharma, the son of a school-teacher, launched Paytm in 2010, going on to make
it India’s leading digital ecosystem. Paytm’s rise to becoming a household name
happened after Uber, the multinational car-hailing service, listed Paytm as one
of its payment options.

On Thursday, while
One97 Communications got listed on the bourses, Vijay Shekhar Sharma grew
emotional. He was seen wiping tears while addressing people gathered at the BSE
hall.

However, the
tumble in the stocks on the first day did hit expectations. “Paytm, the biggest
IPO in India so far debuted the secondary market on a weaker note as compared
to our expectations of a flat listing,” Santosh Meena, head of research at
Swastika Investment Ltd, told PTI.