Paytm could’ve been India’s most valuable startup, but lacklustre stock market debut leads to valuation dip

Paytm, which listed on the bourses today, could’ve become India’s most valuable startup if its $20-billion IPO had gone through. However, the fintech unicorn’s lacklustre market debut not only left retail investors in a quandary but also led to a decline in its pre-IPO valuation of $16 billion.

The Noida-based startup’s valuation is now pegged at around $15 billion (approximately 1.1 lakh crore) after shares plunged 20% below the issue price of Rs 2,150. Earlier in the day, Paytm listed at a share price Rs 1,950, a discount of 9.3% below its issue price, leaving IPO investors unimpressed.

However, despite the dip in valuation, Paytm remains India’s second-most valuable unicorn startup after BYJU’S, which is valued at $18 billion. The edtech major is said to be in talks for a $1.5 billion fundraise that could see its valuation go further up to $21 billion.

Paytm’s market cap too is higher than 32 public and private BFSI companies in India, including IndusInd, IDBI, Federal and RBL Bank among others.

OTHER UNICORN VALUATIONS

Earlier this month, Nykaa’s stellar stock market debut saw it list at a premium of 79%, with its valuation soaring to $13 billion, making the beauty e-tailer India’s third-most valuable startup.

Meanwhile, Zomato, which listed at a 53% premium in July, is valued at $12 billion and is sizably ahead of its peer Swiggy with a $5.6 billion valuation.

Other high-valued unicorns like OYO and Ola are also aiming to raise money from the public markets over the next 12-24 months.

Hospitality startup OYO, which was valued at $9.6 billion during its last fundraise, is aiming for a $12-billion IPO, while mobility major Ola, currently valued at $6.7 billion, is looking at an $8 billion IPO.

Despite the buzz around startup IPOs this year, market-watchers and brokerages remain cautious around their financials, profitability prospects, and overpriced valuations.

Ahead of the Paytm listing, Macquarie said it expects a 44% drop in the fintech firm’s IPO price, and gave an ‘underperform’ rating to the stock. “Too many fingers in too many pies,” the brokerage firm said of Paytm.

“We believe Paytm’s business model lacks focus and direction. We initiate with an UP rating & TP of Rs 1,200, implying 40%+ downside. Competition & regulation will drive down unit economics and/or growth prospects... Unless Paytm lends, it can’t make significant money by merely being a distributor. We therefore question its ability to achieve scale with profitability,” it explained.

Also read: ‘Thank you for taking away our money’, say netizens after Paytm’s lukewarm listing at bourses

Also read: Paytm crosses milestone of Rs 1 lakh crore market cap despite weak listing