Paytm shares fell more than 12 per cent on Wednesday after the anchor investor lock-in period ended, drawing more scrutiny to the financial services company after its disappointing debut last month.
The SoftBank and Alibaba-backed digital payment company’s shares on the National Stock Exchange slid in the minutes after trading on Indian exchanges opened, nearing a record low before recovering to close the day down 7.7 per cent.
Paytm’s November listing was among the worst in India’s stock market history and has cast doubt on a string of expected Indian flotations that was supposed to cement the country’s status as a leading tech destination after the US and China.
Its share price fall came along with pressure on Indian equity markets ahead of the US Federal Reserve decision on Wednesday, with the rupee hitting its lowest level to the dollar since June 2020 in the morning.
Wednesday marked the end of a lock-up period for Paytm’s anchor investors, including BlackRock, Canada Pension Plan Investment Board, Singapore’s GIC, and a host of asset managers and Indian mutual funds.
Investors were initially drawn to Paytm as one of India’s most recognisable tech brands with an early mover advantage. Its November initial public offering raised $2.5bn to value Paytm’s parent company One97 Communications at $20bn and secured paydays for its founder Vijay Shekhar Sharma and shareholders Alibaba and SoftBank.
But analysts questioned the company’s business model as it lost market share to rivals including Google Pay and PhonePe, a payments platform backed by Walmart-owned Flipkart.
India has had a bumper year for companies going public. There have been 93 listings on Indian stock exchanges this year, according to Refinitiv data, the highest number since 2018 and more than double the previous year’s tally of 40.
But even as India’s stock markets has posted strong gains this year, other newly listed companies have also seen selling pressure after initial strong share-price performance.
Shares in the parent company of online insurance marketplace Policybazaar surged after being sold in its IPO for Rs980 in November. But after hitting highs of Rs1,447 it is now trading 22 per cent lower.
Similarly, online beauty retailer Nykaa listed to great fanfare in November. Its shares topped the market at Rs2,492 two weeks ago, but have now slumped 18 per cent.
SR Srinivasan, an investment adviser, said that while Paytm had been overvalued, he did not think its dismal performance would necessarily have an impact on the value of other stocks.
“I think they just made the size too big,” Srinivasan said about Paytm. “People start worrying about the biggest elephant in the room first.”
