One97 Communications Ltd., the operator of India’s biggest digital-payments provider known as Paytm, has just pulled off its worst first-year decline among big IPOs in the past decade — and the pain is getting worse. .
The company, whose founder drew comparisons to the challenges faced by Tesla Inc soon after listing, wiped out 75% of its market value a year after offering its stock for $2.4 billion, the most on record in India at the time. Was big The plunge is the steepest first-year decline globally among IPOs that raised at least the same amount since Spain’s Bankia SA plunged 82% in 2012, data compiled by Bloomberg show.
Paytm’s grim first anniversary underscores the erosion of confidence in its ability to become profitable after launching at a time when India’s IPO market was enamored with tech startups. It is one of those startups that listed with valuations seen by many as overpriced.
The stock’s losses have deepened this week amid concerns over the emergence of a potential competitor owned by India’s biggest conglomerate. Last week, Japan’s SoftBank Group Corp sold its shares in Paytm as the lock-up period in the IPO expired, triggering a three-day decline.
The 30% fall in November has taken its decline to 79% from its IPO price of Rs 2,150.
take root
Tech stocks sold off globally as investors dumped loss-making firms amid a deteriorating macroeconomic environment, analysts at JM Financial Ltd, led by Sachin Dixit, wrote in a note this week.
“This response has been well received by company management and we are seeing all Indian internet companies prioritizing not only profitability but also a clear path forward,” he wrote.
Shares of Paytm were sold at the top of a marketing range following an offering that attracted strong demand from individuals and funds, though they never traded above the listing price. The sale made BlackRock Inc. and attracted traditional global stock pickers such as the Canada Pension Plan Investment Board.
“In every rally, the market gets very bullish about something,” said Sridatta Capitalist, head of equities at Canara Robeco Asset Management. -2014, we were very bullish on midcaps. In 2017-2019 we were very bullish on NBFCs and in 2020-2022 people were very bullish on technology.”
“Some of these companies have good business models,” he said, “yet, you don’t seem to have enough margin of safety because these businesses are evolving.”
The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.
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