India’s biggest IPO Paytm - Starts on a weak note!

A huge wake-up call for IPO investors advising prudence and caution.

For a few months now, the IPOs have been getting an overwhelming response and crazy valuations irrespective of the profitability and economic sense of the companies. The hype created so far, has made a fleet of naïve retail investors believe that IPOs are no less than lottery tickets. Forget crypto, IPOs have become a new money churning instrument. However, Paytm, India’s biggest digital payments platform has put a brake on this hype.

Paytm today made a debut on the BSE and NSE. The stock price opened at Rs 1,955.00 on the BSE and Rs 1,950 on the NSE. The stock price tumbled after it opened and is now trading at Rs 1,608.65 as at 10:58 am on the BSE, down by 17.7%. The stock issue price (upper band) was Rs 2,150. The stock is trading down over 25.25% from its issue price.

The Rs 18,300 crore IPO was the largest in India and was subscribed 1.89 times. Even after the stock has tumbled down in the pricing, the full market capitalization of the company is above Rs 1.04 trillion, which clearly shows how big the IPO was.

This trending company has been facing losses for the last few years. It has been so aggressive in customer acquisition and expanding its digital business across various segments, and reached millions of users, with a customer base of 33 crore. This has contributed to its revenue growth but has not manifested into profits yet. This buzzing stock has been asking for huge valuation for a loss-making company, with seemingly over-optimistic growth expectations, and rational investors have reacted accordingly, by selling the stock.

The IPO has made its founder and CEO Vijay Shankar Sharma a billionaire. According to Forbes, his net worth has reached $2.4 billion. A journey from Rs 10,000 to $2.4 billion has made the founder and CEO a trending personality today.