Contrary to the big listing gains made by Zomato and Nykaa, shares of Paytm debuted at a discount of over 9% and fell over 20% in the first 15 minutes of trading.
The stock opened at Rs 1,950 on the National Stock Exchange and the listing price on the Bombay Stock Exchange was Rs 1,955, against the issue price of Rs 2,150. At around 10.25 am, the stock was trading at Rs 1701, down over 20%.
This flop show by Paytm comes after its IPO, India's biggest at Rs 18,300 crore, struggled to get fully subscribed, raising concerns that investors are not buying the huge valuation (at around 1.40 lakh crore) the loss-making company is seeking.
Research house Macquarie's gave an 'underperform rating' on One 97 Communications, the parent company of Paytm, as it believes the business model lacks focus and direction. It has kept a target price of Rs 1,200, which is around 40% lower than its issue price.
"Dabbling in multiple business lines inhibits PayTM from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view," the research house said in a report.
Commenting on the listing, Santosh Meena, Head of Research, Swastika Investmart said that Paytm debuted in the secondary market on a weaker note as compared to our expectations of a flat listing.
"I would suggest only aggressive investors hold this stock for the long term amid uncertainty where I believe Bajaj Finserv is a much better option to play on Fintech businesses because Bajaj Finserv has a proven track record with great comfort of valuations compared to Paytm. Those who played for listing gain should keep a stop loss below 1720 which is 20% lower than the issue price," added Meena.
Parth Nyati, Founder, Tradingo, said that the company has been loss-making and there is no sign of it turning profitable in the near future.
Nyari adds, "New investors are advised to look for other opportunities where other new edge companies can perform much better than PayTM. We feel due to the brand the company sought high valuation and it might see a correction in the near term."
Meanwhile, shares of Sapphire Foods listed at a premium of 11%. Sapphire Foods India shares hit Rs 1,383 in early trade as compared to the issue price of Rs 1,180 per share.
The Rs 2,073-crore IPO of Sapphire Foods India, which operates KFC and Pizza Hut outlets in the Indian subcontinent, was subscribed 6.62 times.