NEW DELHI: Contrary to bumper listing of Zomato and Nykaa, stock of India's biggest fintech company - PayTM - is likely to make a discounted debut on the exchanges on Thursday, if trends in the grey market are to be believed.
Shares of PayTM on Wednesday were being traded at a discount of Rs 20-30 in the unofficial market vis-à-vis its issue price of Rs 2,150. This comes after the IPO, India's biggest at Rs 18,300 crore, received a lukewarm response, getting subscribed by only 1.89 times.
Gaurav Garg, Head of Research, Capitalvia Global Research, said that Paytm's GMP has reduced consistently from Rs 130 to Rs 30 yesterday and today it is at around Rs -30. "This clearly indicates that the listing is going to be at discount. The trend show that the grey market premium (GMP) has kept on decreasing consistently and there are high chances that the listing will happen at a discount," adds Gupta.
GMP refers to the estimated price a stock might list at. Market participants see GMP as an indicator of the stock's performance on listing.
Ayush Agrawal, Sr. Research Analyst - Merchant Banking at Swastika Investmart, said, "The grey market premium of the company was around 2 per cent between Rs 40 and Rs 50 when issue opened, which is the lowest compared to most of the recently listed IPO stocks. As major portion of the issue is OFS (offer for sale), we expect the shares to list in a flat ambit with negative close at -5 per cent to -10 per cent."
In its IPO, held between Nov 8 and 10, One97 Communications, the parent company of Paytm, raised Rs 8,300 crore by issuing fresh shares, while existing shareholders and promoters sold shares worth Rs 10,000 crore in the offer-for-sale component.
In its first day of subscription, the IPO was subscribed by only 0.18 times. "Rs 1.4 lakh crore valution valution with revenue of just Rs 3,000 crore and continuous losses is too much to ask for even in the on-going bull run. We are negative on the stock," said a leading analyst last week.