Patym operator One 97 Communications has become the third company to join the Rs 1-lakh-crore market capitalisation league through public issues floated this year, though the mobile wallet tanked 27.25 percent on its debut under intense selling pressure.
It was the first of the IPOs that were listed in the last 10 years to see 27 percent correction on the debut day. The issue, priced at Rs 2,150 per share, was locked in the 20 percent lower circuit to settle at Rs 1,564.15 on the BSE, compared to a pre-opening price of Rs 1,955.
At the closing on Thursday, One 97 had a market capitalisation of Rs 101,399.72 crore, while at the issue price, it was having a market value of Rs 1,39,378.83 crore.
Only two issues among the IPOs floated this year – Falguni Nayar-owned Nykaa operator FSN E-Commerce Ventures and food delivery giant Zomato – crossed the Rs 1-lakh-crore mark with market caps of Rs 1,00,154.16 crore and Rs 1,21,731.05 crore before Paytm.
But the difference among these companies was in their stock performance on the listing day. Both these shares fared better than Paytm on the listing day and defended their issue price quite strongly till now.
Also read - With 27% fall on debut day, Paytm emerges as biggest loser among IPOs listed in a decade.
The Zomato shares surged 65.6 percent to close at Rs 125.85 on July 23, 2021, the listing day, and shot up 103.5 percent to close at Rs 154.65, compared to the issue price. Nykaa, too, made its investors richer on the listing day with 96.2 percent gain to Rs 2,206.70 and registered an 88.2 percent gains, as against an issue price of Rs 1,125.
One more factor that made a big difference among the richest trio has been the issue price. Paytm was the first among the IPOs to set an issue price above Rs 2,000 (Rs 2,150 per share), at least since 2007, as per the database of Chittorgarh, and the stock failed to defend this on its listing day. The Zomato issue was priced at Rs 76 and Nykaa at Rs 1,125 per share.
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The issue size of the big three fintechs this year differed from each other by a wide margin. Paytm had successfully mopped up Rs 18,300 crore (which was increased from Rs 16,000 crore earlier), the biggest ever IPO in the history of Indian capital markets, while Zomato raised Rs 9,375 crore and Nykaa mobilised Rs 5,352 crore.
Experts feel the aggressive pricing for issue despite incurring losses year-after-year was one of the key reasons behind a sharp fall in the stock price of Paytm.
“While the management indicated that they had priced the IPO appropriately leaving enough upside for IPO investors, there were clear signs that it was priced very aggressively (significantly higher than global trading peers) leaving little or none for the retail investor. This is a good learning for retail investors and surprisingly some mutual funds as well who were caught in the hype created around the IPO,” said Ujjawal Kumar, Research Analyst at Green Portfolio.
“The listing day performance of Paytm stood out negatively from the other recent IPOs such as Nykaa, Zomato and Policybazaar that were also priced aggressively but did well in terms of the IPO demand and continue to defend their listing price,” Kumar said.
The fintech companies differ with their business models as well. FSN E-Commerce is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers through Nykaa (beauty and personal care) and Nykaa Fashion (apparel and accessories), while Zomato provides a technology platform to connect customers, restaurant partners and delivery partners, serving their multiple needs.
Zomato’s consolidated loss for FY21 stood at Rs 816.43 crore as against a loss of Rs 2,385.6 crore in FY20 on a revenue of Rs 1,993.78 crore as against Rs 2,604.7 crore in FY20, while Nykaa recorded a 38.10 percent growth in revenue from operations at Rs 2,440.89 crore in FY21, compared to the previous year and clocked a profit of Rs 61.95 crore for FY21 as against a loss of Rs 16.34 crore a year back.
One 97 Communications, on the other hand, posted a consolidated loss of Rs 1,701 crore for full year FY21, which was lower than the Rs 2,942.4 crore loss posted in FY20. Total income in the financial year FY21 declined to Rs 3,186.8 crore, compared to Rs 3,540.7 crore in FY20.
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