The entrepreneurs were excited and overwhelmed when the Securities and Exchange Board of India (SEBI) eased the norms of issuing IPO for the start-ups in March 2021 so was paytm.
The founders and investors of the start-ups were filled with great zeal all over the country. It was game changer for all the India based start-ups who had high valuations and or had huge investors’ money with them.
Among all the start-ups, Paytm was expected to be the biggest IPO, who brought fintech revolution in the country. After 6 months of SEBI’s ease of norms, Paytm debuted its IPO on November 8, 2021, under the heads “India’s biggest IPO ever”.
Paytm launched the IPO of $2.47 billion and was just subscribed 67 percent by noon on the last day of the issue period.
In the earlier months of the year 2021, other three high profile start-ups, Zomato, Nykaa and PolicyBazaar, have already listed their shares on the Indian Stock Exchanges. By now, Zomato and Nykaa have already set the bar for the other start-ups.
Zomato launched its IPO in July 2021 and received stupendous response from both retail and institutional investors. Zomato did a great start and was oversubscribed by 38 times. Also, in Zomato stock investors almost doubled their investment within 10 days with 100 percent listing gains.
On the other hand, Nykaa, an online e-commerce fashion company, also received an outstanding response from people by being oversubscribed 78 times. Just like Zomato, Nykaa’s investors also received 100 percent listing gains on the first day of listing.
The exceptional response to the Zomato and Nykaa IPOs from the investors gave confidence to people across the country to go for the start-ups IPO. After the Zomato and Nykaa IPO, the country awaited for the biggest IPO ever to beat the bar.
On 8 November 2021 the much-expected IPO of Paytm was launched. However, no one was aware of the views of retail investors and their plan regarding the Paytm IPO. After three days of the launch, SEBI released the Paytm IPO subscription data which showed that the retail investors disdained the India’s biggest IPO.
Though it was expected that the India’s fintech company would receive an overwhelming response and would be oversubscribed by 100 times. However, the IPO was oversubscribed but still it failed to meet the market expectations.
It was oversubscribed by two times only. People were startled as they expected listing gains just like Zomato and Nykaa. People who have been fortunate enough to book a slot in Paytm IPO are now hoping for the best as Paytm is scheduled to get listed tomorrow on 18 November.
After the offer period of Paytm ended, there had been several discussions amongst fund managers, analysts, and investment advisors regarding response received by Paytm.
Many fund managers quoted their views on Paytm IPO stating that the issue price of ₹ 2,080 – ₹ 2,150 for a loss-making company is a little too much expectation from the investors. The company is making loss for 8 years in a row and has no surety of the profitability.
Paytm is a promising company indeed, but it fails to justify its valuation to the investors. On the other side of the coin, there are few market analysts who believe that the 1.89 times oversubscription of Paytm was on par along with the other major ongoing global issues.
Market analysts also highlighted the fact that retail investors of India have confidence in the digital business, however they were silent on the 100 percent listing gains as made by Zomato and Nykaa.
This disheartening market response received by the Paytm IPO has distressed the IPO of another India based fintech start-up, MobiKwik. It has also been heard that MobiKwik’s two marquee investors, Eastspring Investments and Nomura, have decided to back out from the IPO of MobiKwik for unknown reasons.
MobiKwik decided to raise ₹ 1,900 crore through IPO and received approval from SEBI, planning for $1 billion valuation. MobiKwik is not the only company whose IPO was affected. PB Fintech, parent company of PolicyBazaar and PaisaBazaar, also listed its shares on the stock exchange on 15 November and received not-so-exciting response from the investors.
The share price of PB Fintech rose 23 percent on the first day of the listing. Though, it will be unfair to tag any listing gains as “disappointment” or “underperformers” just they failed to meet the investors’ expectations based on the IPOs listed before them.
Moreover, other start-ups planning to get listed on the stock market will be forced to reconsider their strategies, re-evaluate their valuation and issue size and price of shares. Also, at last everything depends on the listing day of the Paytm stocks.
If the Paytm disappoints its investors and market, it is highly possible that many other start-ups might delay their plan of IPO. Also, according to many investment advisors it is believed that India is under massive IPO bubble and as the bubble gets burst sooner or later, investors will lose billions of dollars of investment in the stocks of start-ups, as these companies are surviving only on the investors’ money.
Neither they have sizeable assets not a fixed profitable business model. As of now, all are eagerly waiting for the Paytm stock to get listed which will also decide the sentiments of retail investors and will also decide the future of the IPOs of many upcoming start-ups.
edited and proofread by nikita sharma