The shares, whose market value was just over Rs 1.39 lakh crore at the issue price, declined 23 per cent (Rs 32,000 crore) by 2 pm to bring the total market value to Rs 1.07 lakh crore. The scrip hit an intraday low of Rs 1,586.25, and at that point the losses to investors stood in excess of Rs 35,000 crore.
At the prevailing price, the stock was commanding a market-cap that was lower than recently-listed Zomato’s Rs 1.22 lakh crore but higher than Nykaa’s Rs 1.01 lakh crore.
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Foreign brokerage Macquarie has initiated coverage on One 97 Communications (Paytm) with an underperform rating and a target of Rs 1,200 compared with the issue price of Rs 2,150, suggesting a 44 per cent potential downside.
Paytm’s business model lacks focus and direction, it said while calling the company a ‘cash guzzler’. Macquarie said achieving scale with profitability is a big challenge and that regulations and competition are added worries.
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“I would not even be comfortable at less than 50 per cent discount to the current price because I do not really see a path to Paytm’s market domination and the kind of dreams that are being propelled,” said Anurag Singh of Ansid Capital.
Singh said if Paytm at $20 billion is saying that I am 65 per cent of Axis Bank, 40 per cent of Kotak Bank, 30 per cent of ICICI Bank and 20 per cent of HDFC Bank, he really does not believe it.
“Even after seven, eight years of being in existence, they have hardly made any dent into brokerages, they have hardly made any dent into the banking space. Payment banks are a limiting factor, but even the average balance in a payment bank account is about Rs 500. Do what you want to do with that? They have hardly made any dent in the lending space. So I can buy dreams but there is only as much that I can pay for it,” Singh added.
