One 97 Communications Ltd., the operator of India’s largest digital-payments service known as Paytm, has had the worst first-year share drop among significant IPOs in the last decade — and the agony is just getting worse.
The business, whose founder compared its struggles to those encountered by Tesla Inc. immediately after its listing, has seen its shares lose 75% of its market value one year after its $2.4 billion sale, India’s largest ever at the time.
According to Bloomberg statistics, the decrease is the largest first-year drop internationally among IPOs that raised at least the same amount since Spain’s Bankia SA’s 82% plunge in 2012.
Paytm’s dismal first anniversary reflects a loss of faith in the company’s capacity to become successful after emerging at a time when India’s IPO market was infatuated with Internet firms. It is one of a wave of businesses that have listed with values that many believe are overblown.
This week, the stock’s losses have widened due to fears over the emergence of a prospective competitor controlled by India’s largest conglomerate.
SoftBank Group Corp. of Japan sold shares in Paytm last week as a lock-up period specified in the IPO expired, driving a three-day drop.
The 30% drop in November brings the total decrease from the IPO price of Rs 2,150 to 79%.
Globally, IT stocks have been sold off as investors avoid loss-making companies in a deteriorating macroeconomic climate, according to JM Financial Ltd. analysts led by Sachin Dixit in a report this week.
This input has been positively welcomed by corporate executives, and we are witnessing all Indian internet companies not only prioritising profitability but also openly expressing the road forward,” they wrote.
Paytm shares were sold at the top of a marketing range following an offering that drew substantial interest from people and investors, but they never traded beyond the listing price.
The transaction drew traditional global stock pickers including such BlackRock Inc. and the CPPI Board.
“In every rally, the industry as a whole becomes unduly excited about something,” said Shridatta Bhandwaldar, head of equities at Canara Robeco Asset Management.
In 2017-2019, we were overjoyed with non-banking financial enterprises, and in 2020-2022, we were overjoyed with technology.”
“”Some of these firms have strong business models,” he said, adding, “but you have the feeling there isn’t enough margin of safety since these are changing businesses.”