Outlook darkens for Indian IPOs after dismal Paytm debut

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Outlook darkens for Indian IPOs after dismal Paytm debut

Paytm, the Noida-based Indian multinational fintech giant founded back in August, 2010, by a Vijay Shekhar Sharma, plunged as much as 27.0 per cent in a cataclysmic public market debut this week, marking off one of the worst-performing IPOs (initial public offering) ever in BSE (Mumbai Stock Exchange) while casting fresh doubts on investor's morals over future offerings.

Nevertheless, an ominous Paytm IPO that dampened investors' sentiment regarding slated future IPOs including MobiKwik and OYO, came against the backdrop of a pluperfect Indian IPO market what combinedly had raised a whopping $9.7 billion in initial public offerings over first nine months of fiscal 2021 through September, the strongest in last two decades compared to same timeframe.

Nonetheless, as questions were raised on a sheer lag in Paytm's profit margins alongside it's skyscrapping valuation, planned future IPOs of entities on Indian capital markets having had hefty valuations would likely to face off an identically probing landscape, suggested analysts.

Meanwhile, pouring fresh scorns over future IPOs in Indian market, a senior investment director at fund manager abrdn, Singapore, said in a client note, "This episode should hopefully bring some realism to valuations that promoters expect from the public markets."

Paytm plunges 27 per cent in disappointing IPO

As of Friday's market closure, Paytm shares were down by 20.0 per cent to ₹1,560 ($20.99) apiece compared to an opening price of ₹1,950 ($26.24). Paytm had priced its IPO between ₹2,080 ($27.99) to ₹2,150 ($28.99) apiece, raising about $16 billion.

On the flip side of the coin, an initial plunge in market valuations in much-hyped tech stocks are commonly witnessed with Facebook Inc., currently re-branded as Meta Platform, taking nearly one and a half years to reach its IPO valuation. Facebook shares tumbled as much as 40 per cent over first several months after going public.