Paytm share price debuts at 9% discount on first day of trading; disappoints investors

One97 Communications, the parent company of the digital payments firm Paytm has entered the Indian stock market with a 20% slump over its opening price. The stock opened at Rs. 1,950 on the National Stock Exchange, which is a decline of 9.3% from the issue price of Rs. 2,150. In a rather unexpected fall, Paytm shares dipped to Rs. 1,655 within hours after being available for public trading. 

However, even after the huge dip in prices, the company records a valuation of over Rs. 1 lakh crores. During the initial public offering, Rs. 18,300 crore Paytm IPO (India's largest) was subscribed 1.89 times. The current Paytm share price is Rs. 1,654.75 (at 12:06 PM IST on November 18, 2021). According to a regulatory document, Paytm raised a lot of money from over 100 institutional investors, who purchased over three and a half crore shares for Rs. 2,150/share. 

Paytm share price dips in first trading session

Analysts and experts monitoring the company and its initial public offering suggest that the expensive valuations of the digital payments firm were the reason behind the huge fall in price in the first trading session. While the Paytm shares were allotted to initial investors at Rs. 2,150/share (issue price), the company offered a 9% discount on the IPO price, hence disappointing investors. Additionally, since the digital payments company has not turned profitable yet, investors might have withdrawn the amount they had put in initially. 

Paytm was founded by Vijay Shekhar Sharma back in 2010. Initially, the platform offered the feature to recharge other mobile devices. Thereafter, the company got listed as a quick payment option by Uber, which boosted the growth of the company. Further, the high-value currency ban in India during 2016 was accompanied by the government's message to use digital forms of currency. The shift also benefited Paytm as a lot of people download the app and started using the platform. 

On the final day of bidding, the initial public offering of One97 Communications, which operates under the brand name of Paytm, was fully subscribed with Foreign Institutional Investors (FIIs) engulfing the issue with offers. The FIIs bided for 4.17 crore shares against 2.63 crores reserved for Qualified Institutional Buyers (QIBs). For more IPO news, stay tuned.