- Only 0.48 percent signed up until the second day
- Big investors stay away from Paytm IPO
It has been two days since the Paytm IPO was opened. Investors aren’t seeing as much buzz for this IPO compared to Zomato and Nykaa. Experts speculate that not much profit is expected from Paytm’s IPO during the listing.
In fact, on the second subscription day of Paytm’s initial public offering, that is, November 9, until 5 p.m., the retail stake was completed at 1.23 percent. While on the first day the retail share was filled up to 70 percent. In this IPO, only 10% is reserved for retail investors. That is, out of 18.3 billion rupees, the retail will fetch shares worth only 1.891 crore.
IPO only 0.48 percent subscribed until the second day
At the same time, the reserve part for non-institutional investors, that is, HNI, is only filled by 0.05 percent until 5pm on Tuesday. The reserve portion for Qualified Institutional Buyers (QIB) has been filled to 0.46 percent so far. Overall, this IPO fills 0.48 percent in two days.
Many market experts are of the opinion that one of the possible reasons behind the weak response from large investors could be the valuation of the IPO. Jyoti Roy, equity strategist at Angel One Ltd, said Paytm is valued at 49.7 times fiscal year 21 revenue by the upper price band. So the IPO valuation may seem expensive today. But Paytm will be the biggest beneficiary of the increase in the number of mobile payments during FY21 to FY26, as the IPO valuation is justified.
Rakhi Prasad, investment manager at Alder Capital, said in an interview with Bloomberg TV that Paytm is a great digital payments platform from a merchant perspective. But you still have a long way to go to make a profit. He said that the expectation of better returns from this IPO in the short term is lower. In addition, the chances of trading with a strong premium are also lower. However, many experts have advised investing in this IPO for the long term.
Reduced premium on the gray market
Another reason behind the weak response to Paytm’s IPO could be a sharp drop in the gray market premium (GMP) of the company’s shares. Unlisted Arena founder Abhay Doshi told BusinessToday that Paytm shares were trading at a premium of Rs 60 on the unlisted market on Monday morning. Which increased to Rs 80 on the day. But a day earlier, that is, November 7, it was trading at a premium of Rs 150.
The company has kept the price band for this IPO at Rs 2,080 to Rs 2,150 per share, and there is a lot size of 6 shares. Depending on the Price Bank (Paytm IPO Price Band) and lot size, the retail investor will need to order at least 6 shares. Based on the upper price band, investors will need to invest a minimum of Rs 12,900. Retail investors can apply for a maximum of 15 lots in this IPO, for which they will have to pay Rs 193,500.