Much hyped IPO of PayTM has turned damp squib and a nightmare of sort for investors as overall investor wealth eroded by over ₹35,000 crores within a few hours of it’s debut in the share market.
In fact, research firm Macquarie posted a ‘Sell’ report on the PayTM stock, just hours before it’s listing saying that the company lacked focus. It termed the company a cash guzzler and gave an “Underperform” rating to the stock with a target price of ₹1,200 a share, down 40 percent from its issue price.
One97 Communications which is Paytm’s parent company witnessed a sharp plunge of more than 10% on Monday, making the company’s post-IPO trading slump to over 36%. It effectively means that the company has lost over ₹50,700 crores in market value. Paytm CEO Vijay Shekhar Sharma, who holds 9.1% stake in Paytm, himself lost ₹5,800 crores.
Experts had questioned PayTM’s ability to achieve scale with profitability saying that Paytm’s valuation, at 26 times the FY23E price-to-sales, is expensive especially in the background of elusive profitability. The company has been loss-making without any sign of turning profitable soon, the experts opined.
The company in the meanwhile has announced that it has recorded a 131 percent increase in its gross merchandise value (GMV) meaning payments made to merchants through its platform—in October 2021 on a year-on-year basis to ₹83,200 crores ($11.2 billion) from a level of about ₹36,000 crores in the same month last year.
