Paytm IPO Live Updates: All about India's largest-ever IPO
Subscriptions to Indian digital payment giant Paytm's $2.5 billion initial public offering slowed down on the second day of share sale because analysts voiced concerns about the company's profitability. So far, only half of Paytm's shares have been subscribed to, and today is the last day to subscribe to it if you want in on the action. Here are more details.
Why does this story matter?
Paytm's IPO opened to a dull response on Monday, although long-time backers such as SoftBank CEO Masayoshi Son remained bullish and hopeful. This is India's biggest-ever IPO surpassing Coal India's public issue worth Rs. 15,000 crore in 2010. However, only 2.71 crore of the 4.83 crore shares (56%) sold as people continue to wait for the company to be listed.
Paytm not profitable to demand share price it seeks
Allocations for anchor investors were oversubscribed more than 10 times last week. This starkly contrasted with the dull response from the masses on the first and second days of sale. This is because of concerns raised by industry analysts regarding when Paytm would turn profitable enough to justify the share price of Rs. 2,150 that it currently seeks.
However, analysts expect Paytm to be fully subscribed by today
An investment manager at Mumbai's Alder Capital, Rakhi Prasad, told Bloomberg that "these are very high-risk bets." Prasad added that Paytm could become the largest digital payments network from a merchant's perspective but it has "a long runway" to turn profitable. Nevertheless, market analysts expect Paytm to be fully subscribed when it closes today despite its slow performance the past two days.
Analysts note investors would be fatigued after other recent IPOs
Separately, Aditya Kondawar of Mumbai's JST Investments said, "Given the market euphoria and the flush of liquidity, the issue will be fully sold but we don't expect big manifold subscriptions given the large size of the share offering." Kondawar also rightly observed that investors could be fatigued from participating in recent IPOs such as Zomato and Nykaa that sold out on day one.
Investors wade cautiously in market flooded with liquidity
Summarizing the general sentiment prevalent among investors, Kondawar mentioned, "Investors are turning a bit cautious as economies around the world are now looking at normalizing easy policies that had been flooding the market with liquidity." Paytm reported a 10% revenue drop in the year ended March 2021. On November 6, Reliance Securities Ltd. analyst Vikas Jain said the company continues to post losses.