Following the buzz, shares of Paytm in the unlisted market have corrected about 10-12 per cent to Rs 3,200-3,250 from Rs 3,600-3,650 earlier.
Paytm was seeking a valuation of $20 billion whereas investors want a lower pricing. The company was last valued at $16 billion, according to unicorn tracker CB Insights.
Sandeep Ginodia, CEO, Altius Investech said that companies do inflate the valuations ahead of IPO via such pre-placements. “It is a gimmick to fetch higher valuations in the IPO. Even at this price, Paytm looks expensive,” he added.
Paytm had reported a 10 per cent drop in revenue during the year ended March 2021, after stiff competition from Walmart-backed Flipkart and Amazon.com Inc.
The failure of pre-IPO plans has jittered investor sentiments. Dealers are expecting more correction in the counter in the coming days. However, the company has not finalised anything yet.
The informal market is due for a correction after the negative news flow as expectations were very high from the stock, said Dinesh Gupta, Co-founder, UnlistedZone. He expects the scrip to slip to Rs 2,500-2,600 in the days ahead.
“Institutions participating in pre-IPO rounds do superb due diligence. Their detachment citing valuation concern is an alarm for investors,” Gupta added.
Banks including Morgan Stanley, Goldman Sachs Group, Citigroup, and ICICI Securities have been appointed for the share sale. The company had filed its DRHP in July this year.
However, not everyone is pessimistic over the scrip as volumes and supply of shares at lower levels have been limited in the unlisted space.
Sambhav Aggarwal of Delhi-based Arms Securities said that the number of sellers is less than the buyers, which is holding the fort for the company.
“Employees, who received shares in the latest ESOP scheme, are not willing to liquidate their positions, which have capped supplies,” he added.
