Scott Murdoch, Abhirup and Anshuman Dyaga

MUMBAI (Reuters – Paytm’s disappointing stock market debut last week could have an impact on future offerings, according to six analysts and bankers. This is despite the fact that the company was ranked one of India’s worst performers in Indian history.

Indian companies raised an astonishing $9.7B through their initial share sale in the first nine months in 2021. It is the most significant such figure for any period in the last twenty-five years, according to EY.

Offerings planned later this year will be questioned by MobiKwik (payments rival) and OYO (hotel aggregator). This is after Paytm experienced a plunge of over 27% in its debut, which was attributed to investors becoming irritated at the company’s lack of profit and lofty valuation.

Kristy Fong (a senior investment director at fund manger abrdn) said that this episode “should hopefully bring some realness to valuations expected from the public markets.” She is located in Singapore.

Analysts and investors concerned by the IPO value of Paytm’s loss-making business at around $18.7bn have cautioned against “frothy valuations” with uncertain business models.

Jimet Modi founder of Samco Securities in Mumbai, said: “It will take 3-4 months for peoples to forget Paytm that destroyed wealth.”

It will be difficult for super-expensive Initial Public Offerings (IPOs) until then.

Paytm was launched by Ant Group and SoftBank. This contrasted with Zomato which saw a 66% increase in July following raising $1.2 million.

Similar results were seen in FSN E-Commerce shares, which also own Nykaa cosmetics-to-fashion website, which jumped 88% on their debut.

Analysts are now concerned that even approaching IPOs, which have experienced huge demand, may suffer a setback on their listing.

Arun Kejriwal founder of KRIS independent research firm, stated to Reuters that “this will put spokes into the market… even those who have seen large subscriptions will see a decrease in premiums.”

BEHEMOTHLIC IN WINGS

The plans for India’s largest-ever IPO are all the attention. It is the IPO of state-owned insurance company LIC. If the government gives a 10% stake, it could bring in more than $10 Billion.

Analysts see no risk in the Paytm impact on LIC. However, LIC is a well-known name in India and commands more than 60% of India’s life insurance market. It has assets that exceed $500 billion.

An executive from a small investment bank said, “My feeling is that even if they price LIC a bit higher, I think, given what it is and what it stands up for and what’s been constructed over many years,” he claimed.

There is a lot of interest in this market and money.

Despite a business model vastly different to Paytm’s, many believe concerns regarding LIC should not be ruled out.

One of the LIC’s IPO project bankers said that everyone would be learning from this listing (Paytm), and that they were confident in its prospects.

Goldman Sachs has been named by the government (NYSE:). Citigroup (NYSE:), SBI Capital Market, JM Financial, Axis Capital (NYSE:), Nomura Securities will manage the IPO.

($1=74.2490 rupees)