Zomato,
Nykaa and
Policybazaar, which all had stellar listings.
On Wednesday, a day ahead of its listing, shares of Paytm parent firm One97 Communications exchanged hands at a premium of just Rs 20-25 over the final issue price of Rs 2,150 on the grey market. On Tuesday, they were trading at a premium of just Rs 30, a mere 1.4% increase over the final issue price,
according to IPO Watch.
The stock was trading at Rs 2,300 a share on the grey market on November 7, a premium of Rs 150 or 7% over the issue price. This fell to Rs 80 on the first day of the IPO and by the close of the issue on November 10 it was at Rs 40.
Grey market premium (GMP) is a term used in the IPO market and refers to the estimated price a stock might list at. The grey market is unofficial but investors use the GMP as an indicator of how the stock could perform on listing. GMP, while a useful indicator, is by no means infallible. Sometimes it predicts the listing price accurately and sometimes it doesn’t.
Flat listing expected
Dealers tracking the grey market said the ultra-expensive pricing, poor financials and muted growth prospects were the key reasons for the poor listing.
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Abhay Doshi, cofounder, UnlistedArena, said Paytm was likely to be a flop on debut, despite the hype it generated as India’s biggest IPO ever. “The valuations of the issue were on the expensive side. Also, the company has not shown any significant performance in the financials and it is losing market share,” he added.
Ankur Saraswat, Research Analyst at Trustline Securities, said the company would make a flat listing. “New investors should wait for a meaningful correction in the shares and then enter this fintech behemoth,” he added.
Paytm’s lukewarm IPO
In its IPO, held between November 8 and 10,
Paytm raised Rs 8,300 crore by issuing fresh shares, while existing shareholders and promoters sold shares worth Rs 10,000 crore in the offer-for-sale component.
The IPO was subscribed just 18% on the first day of bidding, with the company receiving bids for 88.21 lakh of the 4.83 crore equity shares on offer. On day 2, it was subscribed 48%, with 2.34 crore bids received. India’s biggest IPO was fully subscribed on day 3 and was eventually subscribed 1.89 times.
