Paytm fails to shine on exchanges; stock debuts at 9% discount at Rs 1,955

At 10:01 am; Paytm was trading at Rs 1,805, 16% lower against its issue price of Rs 2,150

One 97 communications, the parent company of digital payments major Paytm, made a weak stock market debut as its shares got listed at Rs 1,950, a 9 per cent discount against its issue price of Rs 2,150 on the National Stock Exchange (NSE) on Thursday. On the BSE, the stock opened at Rs 1,955 per share.

At 10:01 am, Paytm was trading at Rs 1,805, 16 per cent lower against its issue price. The stock hit an intra-day low of Rs 1,777 on the BSE and NSE.

The company's Rs 18,300-crore initial public offering (IPO), the biggest-ever in the domestic capital markets, had managed to scrape through in terms of subscription thanks to foreign portfolio investors (FPIs). The issue had been subscribed 1.89 times, with the institutional portion geeting a subscription of 2.79 times and the retail investor portion 1.66 times. However, the wealthy investor portion was subscribed by just 0.24 per cent, data shows. As major portion of the issue is offer-for-sale (OFS), most of the brokerage houses had expected the shares to list flat.

Paytm is India's leading digital ecosystem for consumers and merchants. It is the largest payments platform in India, with a GMV of around Rs 4 trillion in financial year 2020-21 (FY21). The company offers consumers & merchants, technology-led, easy-to-use digital product and services as well as easy and inclusive access to financial service.

Paytm brand is India's most valuable payments brand, with value of $6.3 billion and remains the easiest way to transact across multiple methods. The company plans to continue to expand the merchant network across cities and towns in India while deepening partnerships with existing merchants.

"The payment services of Paytm account for the majority of its income. Their attempts to broaden the service offerings and market reach may be challenging, which might have a negative impact on its income," according to Aayush Agrawal, senior research analyst - Merchant Banking at Swastika Investmart.

He added: Also, it is a loss-making company with a loss of Rs 4,231 crore in FY19, which was reduced to Rs 1,701 crore in FY21. As India is buoyant on digitalization, we expect the company to get benefited from the same in the long run. Also, new acquisitions and strengthening of the PAYTM ecosystem will be beneficial for the company.

In the event that payment processing charges payable to financial institutions and card networks increase significantly, and Paytm is not able to pass on these higher processing charges to its merchants or consumers, it may not be profitable. Offer some of its services in partnership with Group Company, Paytm Payments Bank. Any failure by Paytm Payments Bank to support these services could adversely impact these services and could impact the overall business, financial condition and results of operations are among key concerns, HDFC Securities had said in IPO note.