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paytm: Paytm lists at Rs 1,950, shares plunge 21% in first day of trade

Shares in Paytm plummeted 21% in their market debut, valuing the Ant Group-backed digital payments firm at around Rs 1.11 trillion ($14.9 billion) after it completed India’s biggest-ever IPO. Shares were changing hands at Rs 1,705 rupees in early morning trade versus the offer price of Rs 2,150. Paytm, which also counts SoftBank among its backers, raised $2.5 billion in its initial public offering, of which $1.1 billion was from institutional investors. Last week it received $2.64 billion worth of bids for the remaining shares on offer, or 1.89 times. Analysts at Macquarie Research said in a note to clients that Paytm’s business model lacked “focus and direction” and initiated coverage with an underperform rating. “Achieving scale with profitability a big challenge,” the note said, calling the company a “cash guzzler”. The company priced its 85.1 million-share issue at the top of the range at Rs 2,150 each. Engineering graduate Vijay Shekhar Sharma founded Paytm in 2010 as a platform for mobile recharges. The company grew quickly after ride-hailing firm Uber listed it as a quick payment option in India and its use swelled further in late 2016 when New Delhi’s shock ban on high-value currency notes boosted digital payments. Paytm’s success has turned Sharma, a school teacher’s son, into a billionaire with a net worth of $2.4 billion according to Forbes. Its IPO has also minted hundreds of new millionaires in a country where per capita income is below $2,000.

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