One 97 Communications, the operator of digital payments provider Paytm, has capped the worst first-year share plunge among large IPOs over the past decade and the pain is worsening.
One year after its $2.4-billion IPO, the largest ever in India at the time, the company, whose founder Vijay Shekhar Sharma likened its difficulties to those faced by Tesla shortly after the listing, has seen its stock lose 75% of its market value.
Paytm's dismal first anniversary highlights a loss of faith in the company's capacity to turn a profit after making its debut when the nation's IPO market was enamoured with tech startups. It is one of many businesses that listed with valuations that many people believed to be inflated.
This week, the stock's losses have gotten worse as worries about the development of a potential rival controlled by Reliance have grown. As a lock-up period stipulated in the IPO came to an end last week, Japan's SoftBank sold shares it had in Paytm, causing a three-day decline. November’s 30% slide has taken its decline from the IPO price of Rs 2,150 to 79%.
Tech stocks globally have been sold off as investors shun loss-making firms amid a deteriorating macroeconomic environment, JM Financial analysts said this week. “This feedback has been well received by company managements and we are seeing all Indian internet companies not just prioritising profitability but also communicating the path forward explicitly,” they wrote.
