Paytm listing day strategy: Grey market premium falls after IPO shares allotment; should you sell, buy, hold?

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Updated: November 17, 2021 10:41 AM

Paytm shares will started trading on BSE and NSE from tomorrow after India’s largest IPO’s share allotment was finalised on Monday.

Paytm listingPaytm, a fintech giant, backed by Ant Group, raised Rs 18,300 crore from the primary market earlier this month.

Paytm shares will list on the stock exchanges tomorrow after India’s largest IPO’s share allotment was finalised on Monday. Paytm’s Rs 18,300-crore IPO — the largest to date on Dalal Street — was subscribed a total of 1.89 times with Qualified Institutional Investors bidding in the largest numbers. However, falling grey market premium and weak demand from NIIs has left investors wondering if they should sell their shares on listing, or hold for long-term gains. 

Paytm IPO: Listing gains, or flat opening?

“We are bullish on Paytm; we expect around 30% gains on listing,” said Vishal Wagh, Head of Research, Bonanza Portfolio. While Paytm IPO was not fully subscribed in the NII category, he continues to be bullish on the company prospects. Vishal Wagh expects the market sentiment to improve in the coming days but advises investors to book profits if the stock soars over 30% above the issue price of Rs 2,150.

Akhil Rathi, Vice President Advisory, Marwadi Shares and Finance, expects flat listing for Paytm shares. “We expect a flat listing as valuations are demanding for a loss-making company,” Rathi told Financial Express Online. Paytm shares today were trading with a muted premium of just Rs 30 apiece in the grey market, down from Rs 150 ahead of the IPO. The falling grey market premium may also hint at a muted listing for the fintech giant.

Paytm stock’s high valuations not justified; re-enter at better price

Analysts also question Paytm IPO price, saying that the issue is expensive for a loss-making entity. “Heavy loss-making company, asking for a valuation of Rs 1.4 lakh crore with revenue of around Rs 3,000 crore and losses. Some have predicted losses for another two-three years for Paytm, so how can we suggest someone to invest in such a company? So we are negative on it,” Vinod Nair, Head of Research, Geojit Financial Services told Financial Express Online. Vinod Nair added that Paytm has to show a lot about their future growth plans to justify the valuations.

Analysts question Paytm’s valuation — for a company that is yet to report profits — and advise long term investors to wait for a better entry point into the stock. “In upcoming quarters the company is expected to post loss as company strategy is to grow its consumer base, merchant base, advanced technology platform and rapidly scale up for other segments,” said Akhil Rathi. “On valuation front, the company is going to list at a Market Cap/Sales of 44.36 with a market cap of Rs 1.39 lakh crore,” he said, adding: “Long investors should wait for better prices to enter the stock and watch out for the company growth in future.”

Earlier, AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express Online that investors should wait for a decent correction in Paytm post listing. “On a listing day, allotted investors should book profits & await a decent correction of at least 15-20 per cent to re-enter at better levels,” he added.

Share allotment out

Paytm’s share allotment was finalized yesterday. Ant Group-backed, Paytm had priced its shares in a price band of Rs 2,080-2,150 per share, valuing the company at Rs 1.39 lakh crore at the upper end of the price band. Investors can check the allotment status of Paytm on BSE website — https://www.bseindia.com/investors/appli_check.aspx

To check the allotment status, investors need to select ‘equity’ as the issue type, and ‘Paytm Ltd’ as the issue name from the drop-down list. Enter the application number and PAN (permanent account number). Click on ‘I am not a Robot’. In the last step, click on the search tab to view the status details.

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