Shares, whose market value at issue price was over Rs 1.39 lakh crore, declined 23 per cent (Rs 32,000 crore) to total market value of Rs 1.07 lakh crore as of 2 pm. The stock hit a low of Rs 1,586.25 during the day and lost over Rs 35,000 crore to investors at that time.
At the current 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 One97 Communications (Paytm) with a target of Rs 1,200 against an underperform rating and an issue price of Rs 2,150, which suggests a potential decline of 44 per cent.
Paytm’s business model lacks focus and direction, it said, calling the company a ‘cash guzzler’. Macquarie said achieving scale with profitability is a major challenge and regulations and competition are additional concerns.
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Anurag Singh of Ansid Capital said, “I would not be comfortable with even less than 50 per cent discount on the current price as I really don’t see the way for Paytm to dominate the market and the kind of dreams that are being pursued.” ”
Singh said that if Paytm is saying $20 billion 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, then it really doesn’t believe it.
“Even after seven, eight years of existence, they have hardly made any break into the brokerage, they have hardly made any break into the banking sector. Payments banks are a limiting factor, but even payments bank accounts The average balance is also around Rs 500. What do you want to do with that? They have hardly made any dent in the lending space. So I can buy dreams but I can pay only as much for it,” Singh said said.