Paytm IPO had brought the biggest IPO of Rs 18,800 crore in history, starting at Rs 2,150 per share, paytm was at a low of Rs 520
In the IPO of Paytm-One97 Communications Limited, the investors who have invested their precious capital of 18,300 crores in the company, high net worth investors have been in log stays with retail investors. Shares of the company, which were allotted shares at Rs 2,150 per share in the IPO, fell 76 per cent from its issue price to hit a new low of Rs 520 today. Many investors are skeptical about the valuation of the issue’s lead managers – merchant bankers, who valued the stock at 2,150 at the time of the company’s issue. At the same time, investor confidence in investing in new age technology companies has started to decline.
Paytm investors are seeing a boom again in the days of Reliance Power. Paytm-One97 Communications Company has also repeatedly claimed that its business fundamentals are strong, but its stock is falling day by day. The situation is that starting at Rs 2,150 per share, it is now at a low of Rs 520. This means that those who invested Rs 12,900 in the retail sector by buying 6 shares at Rs 2,150 each, in the IPO, have lost 76 per cent of their capital to a new low of Rs 520. Accordingly, his amount is only Rs 3,120. In this way, the capital of retail investors has fallen by Rs 9,680 in just 6 stocks.
Let us inform that at the time of IPO, some broking houses had warned that the shares of Paytm were being offered for overvaluation. The initial valuation of the stock by Macquarie for this stock should actually be 1200. Macquarie again lowered the valuation-target to 900 and then to 700. Besides Macquarie, broking house Morgan Stanley downgraded Paytm from overweight to equal weight and lowered the stock’s target to 935 from 1425. The share of Paytm can go down to Rs 450 i.e. a fall of 35 percent and may come in the stock. Suresh Ganapathy of Macquarie Securities India, who had earlier predicted a major fall in Paytm’s stock, has proved to be correct. He has predicted the fall of Paytm’s stock to Rs 450. As the stock continues to break even with the new low target, the stock exchanges have had to seek clarification from the company. Of course, the company has clearly claimed that its business fundamentals are strong. If the fundamentals of the company are so strong, why does the stock price keep falling by 75% in a short period of time? With this question, on what basis did the merchant bankers-book running lead managers rate the valuation of the company from 2080 to 2150 per share in the investor segment? Questions are also being raised on the role of these merchant bankers.
Why are IPOs with such high unrealistic valuations approved by the capital markets regulator? Doubts are rising as to whether the IPO was allowed to issue at any cost. If the fundamentals of a company, whose capital has been raised by issuing fresh shares worth Rs 8,300 crore, are so strong, then the factors that caused the share price to fall continuously from Rs 2,150 to as low as Rs 520 should be examined . At the same time, the role of merchant bankers-lead managers who maintain this valuation should be closely scrutinized.