Vishwadha Chachander and Nupur Chander

MUMBAI (Reuters – Paytm, an Indian payment company that uses digital technology to make payments in India fell 26% during its initial day of trade. This was despite investors questioning the firm’s lack of profit and its high valuations from the country’s biggest-ever IPO.

Although there were some concerns that Paytm’s initial market launch might disappoint, Thursday’s steep fall was remarkable.

The offer price for 2,150 rupees was 1,586.35 rupees. Shares traded at this rate, which valued the company at $13.9 billion.

It was only 1.560 rupees away – this level represents a 20% drop from the open, which would activate the circuit breaker of the exchange and stop trading for the day.

Funded by China’s Ant Group as well Japan’s SoftBank. The fintech firm grew quickly after Uber (NYSE: ) listed it in India for a quick payment option.

Paytm believes it can break even in the second half of next year, or in the first quarter of 2023 according to a source. However, the company stated in its prospectus that it expects to continue making losses in the future.

Thursday’s investors and analysts appeared to have lost faith.

“Paytm’s financials are not very impressive and the growth prospects seem limited… obviously the company lacks a clear path to profits,” said Shifara Samsudeen, a LightStream Research analyst who publishes on Smartkarma.

Company reported a loss amounting to 3.82 billion Rupees (or $51.5 million) for the June quarter. This is more than the 2.84 billion rupees loss that was recorded in the same time last year.

Paytm’s $2.5 Billion offering was priced above the indicative range. However, the demand for the stock was lower than any other recent sales as Paytm lost market share to Flipkart (NASDAQ:), and Google’s PhonePe.

The company raised $1.1 million from institutional investors. Last week, it received bids of $2.64 trillion for remaining shares. This is a low level oversubscription of just 1.89 times.

Many market participants saw the terrible stock debut as a sign investors have lost faith in recent IPOs that had high valuations.

Sumet Singh of Aequitas Research said that most domestic institutional investors have apparently skipped the IPO. He also published on Smartkarma.

The stock was being offered for 27x enterprise value/gross profits for fiscal 2024. This is far higher than 21.3x for Zomato Ltd or 23x for Sea Ltd.

Also, he noted that SoftBank and Ant had both reduced their stakes in the offering. Ant’s stake was reduced to 23%, from 28%; SoftBank Vision Fund lowered its holding by 2.5 percent to 16%.

Sandip Sabharwal, a Mumbai-based investor advisor said that Paytm’s listing may bring an end to obnoxious pricing on IPO markets.

Vijay Shekhar Sharma (a former schoolteacher’s son) has become a billionaire through Paytm. He now owns $2.4 billion in net worth according to Forbes. In a country with a per capita income of less than $2,000.000, hundreds have become millionaires through its IPO.

($1 equals 74.355 Indian rupees).