Paytm likely to reverse this trend, with a weak trading opening

Paytm likely to reverse this trend, with a weak trading opening

Paytm’s trading debut is not expected to be a hit like its startup peers Nykaa and Zomato. Gray market activity suggests that the stock may get listed near or even below its issue price of Rs 2,150 per share.

One97 Communications, the parent company of digital payments company Paytm, will make its stock market debut on Thursday. The company’s Rs 18,300-crore IPO, the biggest ever in the domestic capital market, managed to scrape subscriptions thanks to foreign portfolio investors (FPIs).

The stock remained marginally lower in the gray market before listing.

“There are indications that the stock will be listed below the issue price. If that happens, we will have to see if big investors come forward to buy the shares. I believe that unless there is more visibility on profitability, investors will not get excited. Deven Choksi, Managing Director, KR Choksi said, “We want to wait and see and will not buy immediately.

The institutional investor portion of the IPO was subscribed 2.8 times, but nearly 80 per cent of the bids came from foreign investors. Domestic mutual funds (MFs) defaulted substantially due to bidding of just Rs 155 crore in the IPO.

“We did not have a positive outlook on the IPO and with weak membership, we are not very excited by the prospects for listing. The company is losing value market share to peers and its growth has been largely on high cash burn, which is likely Continue on. Even valuation at 36 times revenue was not attractive. If one gets allotment, we do not recommend holding the stock and it is better to exit post listing,” said Geetanjali Kedia, Senior Research Analyst, SP Tulsian Investment Advisors said.

Primary market experts said high net worth individual (HNI) subscriptions are a good indicator of how the IPO will perform on day one. In Paytm’s case, HNI Book got only 24 per cent subscription.

“Usually, HNIs create an environment for profit through panic selling or greedy buying, which is unlikely to happen in the case of Paytm. So I am not seeing more than 5 per cent profit or fall on the first day of Paytm. The story was not good the public is informed. Consumers usually come for a brand if the usage is convenient and Paytm has that advantage. If one gets allotment for a quarter or two for more clarity then the stock Better to hold,” said Arun Kejriwal, founder, Kejriwal Research and Investment Services.

Paytm had sales of Rs 3,142 crore in the 12-month period ended June 2021. Paytm will be worth Rs 1.39 lakh crore at its issue price. On a post issue basis, the company is going to be listed on a market capitalization to sales ratio of 44.4 times.

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