One97 Communications Ltd., the parent company of digital payments platform Paytm, recorded the worst trading debut in at least two decades as the stock crashed 27 per cent on Thursday.
In a tweet, Harsh Goenka, Chairman RPG Enterprises, expressed caution, "For those who subscribed to the IPOs - let it be a lesson. For those who are looking at future IPOs - be very careful. Go back to the basics -- profits, free cash flow, PE multiples. I can visualise another dot com like collapse. And the retail shareholders are going to get burnt."
After the listing, Paytm's founder Vijay Shekhar Sharma said that he wasn't disappointed. "We are not going to be driven by stock markets because the opinions of buyers and sellers run share prices."
On November 18, Macquarie initiated coverage on Paytm with an 'underperform' rating and a price target of Rs 1,200 apiece, implying a potential downside of more than 40 per cent to the IPO price.
"My heart goes out to individual IPO investors who must be rattled but I'm sure Paytm will find its right level. There is, however, a silver lining to this sobering debut: it could moderate the casino-like feeding frenzy for IPO listings & help restore the hunt for true value," tweeted Anand Mahindra, Chairman, Mahindra Group.
Interestingly, Subramanian Swamy, Rajya Sabha MP, also tweeted about the Paytm debacle. "The enlightened people of India have spoken: Modi Govt encouraged Paytm which is largely driven by Chinese rich abroad tanked in the stock market yesterday in the biggest IPO crash," Swamy said in a tweet.
According to Prime Database, Paytm beat Reliance Power Ltd.'s 17.22 per cent drop on its listing day in 2008.
The Rs 18,300 crore IPO witnessed 1.89 times more demand than the shares on offer, but the portion reserved for non-institutional investors remained undersubscribed by the end of the final day.
About 48 per cent of the issue was being bought through the second day and 18 per cent on the first. The public float, having a price band of Rs 2,085-2,150 apiece, comprised a fresh issue worth Rs 8,300 crore and an offer-for-sale by existing shareholders worth Rs 10,000 crore.
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