Paytm IPO: Paytm IPO GMP on Wednesday, October 17, traded at the lowest among all other initial public offers of companies available at the grey market. The grey market premium of India’s largest public issue worth Rs 18,300 crore was trading at Rs 2,180 on the day, amid decent response from buyers. This was only a premium of Rs 30, or 1.4 per cent, over the final issue price of Rs 2,150, data available from IPO Watch showed. This comes a day ahead of the shares getting listed at the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Paytm GMP has been falling as the company approaches its listing day on Thursday, November 18, which is tomorrow.
Paytm IPO, organised by its parent company One97 Communications, has received a tepid response from investors. The Paytm IPO has been subscribed 1.89 as of its final day of bidding, according to data from stock exchange. The company’s stocks were trading at Rs 2,300 on October 7 at the grey market, which is a Rs 150 or 7 per cent premium over the final issue price, but fell to Rs 80on the opening date of the IPO. On the closing day of the issue, the Paytm IPO GMP fell to as low as Rs 40.
As per experts quoted by moneycontrol.com, one of the reasons of the falling GMP could be the muted response to the Paytm IPO against high expectations.
“We have seen the grey market premium (GMP) declining consistently and the same is at around Rs 30 as of now. In my view, the GMP has seen a fall because the IPO has not received that great a response. However, the expectations from the IPO were sky high over the past few months. This signalled that enough supply would be available in the secondary market and that, too, at a discounted rate and hence the fall in the GMP,” said Gaurav Garg, head of research at CapitalVia Global Research.
One97 communications, the parent company of Paytm, has received bids for 9.14 crore shares against 4.83 crore shares offered for sale. Qualified institutional buyers subscribed 2.79 times the portion reserved for them, while retail buyers bid 1.66 times the part set aside for them. Non-institutional buyers have booked 24 per cent of the shares kept aside for them. The offer was a mix of fresh issue of Rs 8,300 crore and an offer for sale (OFS) of Rs 10,000 crore by selling shareholders including founder and investors. Founder Vijay Shekhar Sharma sold Rs 402.65 crore worth of shares through OFS.
“It (Paytm) is a loss-making company with a loss of Rs 4,230.9 crore in FY19, which was reduced to Rs 1,701 crore in FY21. As India is buoyant on digitalisation, we expect the company to benefit from the same in the long run. Also, new acquisitions and strengthening of the Paytm ecosystem will be beneficial for the company. Hence, we recommend only aggressive investors with a long horizon to stay invested in the IPO,” Aayush Agrawal, senior research analyst at Swastika Investmart told moneycontrol.com.
Paytm is going to utilise net proceeds from its fresh issue for growing and strengthening Paytm ecosystem, including through acquisition and retention of consumers and merchants and providing them with greater access to technology and financial services . The fresh issue fund will also be used for new business initiatives, acquisitions and strategic partnerships and general corporate purposes. The portion from OFS will go to selling shareholders.
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