Paytm’s parent company One 97 Communications marked a disappointing start to its stock market journey as shares listed at a discount to IPO price.
Analysts had advised investors to exit the stock on listing and wait for better entry opportunities. Large concerns have been voiced around Paytm’s high valuations. With a market capitalization of Rs 1.26 lakh crore, Paytm is yet to turn profitable, which has been the talking point for analysts. The Ant-Group-backed firm is expected to continue to report losses over the next few years.
Paytm started as a digital wallet platform, enabling customers to make utility payments and mobile recharge through the application has turned into a payment super-application that offers wealth management, e-commerce, insurance, credit, and much more. “As per an RBI internal study, payments banks may be allowed to apply for small finance bank (SFB) licensing, which would enable Paytm to lend on its own balance sheet,” said domestic brokerage firm Motilal Oswal in a report. Payments and financial services contribute around 75% to the company’s total revenues.
The public issue of Paytm was subscribed 1.89 times by investors earlier this month. Qualified Institutional Buyers (QIB) had subscribed to the issue 2.79 times their portion while retail investor subscription was at 1.89 times. Non-Institutional Investors (NII) had subscribed to their portion only 0.24 times.