The stock listed at Rs 1,950, a discount of 9.3% on the offer price of Rs 2,150, and closed 27% down at Rs 1,564.15. This is the first of six recent startup IPOs to be listed below the offer price. Anil Ambani-controlled Reliance Power had posted a 21 per cent decline for the first time since its Rs 11,700 crore IPO in February 2008.
Investors in the One97 IPO lost around Rs 5,000 crore out of their Rs 18,300 crore investment. While institutional investors lost Rs 4,254 crore, retail investors posted a net loss of Rs 567 crore. High net worth individual investors suffered a loss of Rs 166 crore.
at closing price,
One97 commanded a market capitalization of Rs 1.01 lakh crore ($13.3 billion)., lower than the $16 billion valuation the company reported in November 2019, at which the company raised nearly $1 billion. Recently listed Zomato on Thursday commanded a market capitalization of Rs 1.22 lakh crore.
Vijay Shekhar Sharma, Founder and CEO, One97 said, “Both the IPO price and the listed price were decided by the investors, not the companies. “We fundamentally believe that payments-based financial services are an incredible opportunity in India. This is what we are committed to and will remain committed to in the near future.”
Brokerage Macquarie on Thursday launched coverage of One97 with an underperform rating and target of 1,200, 44% below its IPO price of Rs 2,150. The business model lacks focus and direction, calling it a “cash guzzler”. Macquarie said achieving scale with profitability is a major challenge and regulations and competition are additional concerns.
Other bad debuts after the over Rs 1,000 crore IPO include Cafe Coffee Day, which fell 18% in November 2018, while ICICI Securities fell 14% in April 2018.
One97’s launch is unlike other startups.
PB FintechFSN E-Commerce Ventures, the parent of digital insurance marketplace PolicyBazaar and parent of beauty ecommerce platform Nykaa, made its debut in November and listed at a premium to its IPO prices. hero
Opened on 10th November with 77.87% premium more than the issue price.
Analysts who questioned the One97 business model and the lack of profits as well as the high valuations were expecting the stock to list at a discount of 5-10%.
“Investors can continue to hold the stock with a long-term view, while short-term investors can exit the stock,” said Vikas Jain, analyst, Reliance Securities. Weak subscription numbers weighed down on morale and weak listings, which could lead to some further correction in the stock.
The Rs 18,300 crore IPO of One97 ended on November 10, the last day of bidding, with the help of foreign institutional and domestic retail investors.
About 80% of the bids came from foreign institutional investors, while 16% came from local retail investors. HNIs bid for only 2.5 million shares, accounting for 2.77% of the total demand, while corporate, domestic institutional bids were just half a percent.
One97’s loss narrowed to Rs 1,701 crore in FY11 from Rs 4,230.9 crore in FY19. At the offer price, the issue price was 21.3 times the FY 2011 price to book value and 49.7 times the FY 2011 price for sale.
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