The share price of One 97 Communications, the parent company of Paytm, the Indian payment platform known as Alipay in India, fell sharply on Monday for the third consecutive trading day, with a drop of nearly 12% at one time. The company’s stock plunged 27% on its first day of listing on Thursday, as investors questioned the company’s valuation and profitability. This is in sharp contrast to the recent trend of a series of Indian startups’ IPOs rising on the first day.
The company’s IPO price is 2,150 rupees per share, and the total amount of funds raised reaches 2.5 billion US dollars. It is India’s largest IPO this year. Sovereign wealth funds such as BlackRock, the Canadian Pension Plan Investment Board (CPPIB) and Singapore are all anchor investors in this offering.
Some industry experts believe that Paytm’s overvaluation, lack of a focused business model, limited promoters in India, and unfavorable analyst ratings are some of the reasons for the company’s stock price drop on its first day of listing.
Before the company’s shares began trading last Thursday, Macquarie Capital Securities (India) Ltd. gave the stock an initial rating of underperforming and set a target price of Rs 1,200, which is 44% lower than the IPO price. Macquarie analysts Suresh Ganapathy and Param Subramanian wrote in the report: Considering Paytm’s serious money-burning business model, there is no clear profit path, the business faces huge regulatory risks, and there are problems with corporate governance. We believe that the company is in 2, The upper end of the 150 rupees price range is overvalued.
On Sunday evening, Paytm shared its business progress since October 2021, but for retail investors, this did not seem to have much impact.