Paytm, well there is not a single soul who wouldn’t know about this organization. They introduced the concept of digital payments in India. And revolutionized the way we make payments. Given the sentiments of people were sort of attached to the organization, because of the convenience they provided. Their IPO was much-anticipated and it hyped the entire market. The Fall of Paytm The company though being welcomed in the market warm-heartedly wasn’t making any profits as such. The true intrinsic value of the firm as assessed by many analysts was about Rs. 800/-. However, the stocks were valued at about Rs. 2080/- to Rs. 2150/- The valuations were so overblown that it was impossible for the stock to sustain the hike. Their business model to cope up with their losses wasn’t so commendable either. Making people lose faith in their stocks while the price fell abruptly. Well, the true price of the stock is still unveiled as anchor investors are still under a lock-in Period. It was not just a shame to the organization but also to the Indian economy. The IPO of the biggest startup with the highest valuation had a 40% depreciation in a few weeks of its listing in the stock market. Curbing the Foreign Direct Investors from investing in the Indian Market. The fate of Paytm is still unclear as the market is still not clear about the company’s core business and the timing of its profitability. The future of the business is still very distorted as the competition is surreal given by the UPI. Though Paytm disrupted the payment industry post demonetization, UPI overthrew it. Macquarie Capital in its research report, Too Many Fingers in Too Many Pies, released on Paytm’s listing day, writes, “Paytm’s business model lacks focus and direction.” Also, one of the other major factors was bad timing. The IPO got listed when NIFTY was in the fall of 840 points in the past month. The Overnight Index Swap (OIS) is trading at 35 to 40 basis points above the Reverse Repo rate of 3.4 percent So, bond markets are anticipating rate hikes in India too. Generally, interest rate hikes are considered a bad omen for buoyant equity markets. The huge size of the IPO was in itself a cause of downfall. When the entire world is still recovering from the impacts of the pandemic the company raised Rs. 18,300 crores for which the market didn’t have an appetite. The fall of Paytm has had a serious impact on the minds of Retail Investors. The financial impact may have a hope of recovery, but the faith of the people in the stock market will take time to heal. The Paytm IPO has proved that “Everything that glitters is not gold.” Thank you.
Well Written
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