Paytm share cost has surged in the unlisted market place following the announcement of the company’s initial public supplying (IPO). Paytm stock has nearly doubled in the unlisted market place to up to Rs 24,000, according to the persons who deal in shares of unlisted firms. Paytm shares in the unlisted market place have been trading at Rs 11,000-12,000 per share just before the IPO news. In just 5 days right after the IPO news the share cost rose to Rs 21,000, according to the dealers. “The shares of paytm were available at very cheap valuations prior to the news and the valuation gap led to heavy demand amongst the investors and shares almost rallied over 100 per cent in a week,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told TheSpuzz Online.
Earlier, last week, Paytm received in-principle approval from the company’s board to raise about Rs 22,000 crore by way of IPO in the course of the October-December quarter this economic year. The firm expects to raise about Rs 21,000-22,000 crore from the IPO, news agency PTI quoted a supply as saying.
Pre-IPO investing: Be cautious
Paytm’s important shareholders involve Alibaba’s Ant Group (29.71 per cent), Softbank Vision Fund (19.63 per cent), Saif Partners (18.56 per cent), and founder Vijay Shekhar Sharma (14.67 per cent). AGH Holding, T Rowe Price and Discovery Capital, and Warren Buffet’s Berkshire Hathaway hold much less than 10 per cent stake in the firm.
“One thing to be cautious of here is that Paytm hasn’t decided on an issue price yet, so it may very well happen that the price being paid now in the unlisted market may be very much higher than the IPO price,” Aditya Kondawar, Founder, COO, JST Investments, told TheSpuzz Online. Kondawar additional mentioned that a comparable factor had occurred in Barbeque-Nation, as its 2018 pre-IPO cost was Rs 1,one hundred (cost corrected to 600 sooner or later), with IPO coming in at Rs 500. Moreover, pre-IPO shares come with a one-year lock-in period.
Can robust grey market place premium in Paytm shares outcome in listing gains?
“Of course, there are examples where pre IPO investing has also benefited a lot of investors, but it doesn’t hurt to be cautious and have a margin of safety built-in,” Kondawar added. “There is a lot of expectation from this stock and inspite of these high prices there are investors who expect to make money from the IPO, the price band of IPO is not yet announced however such premiums in the grey market may result in listing gains,” Vishal Balabhadruni, Banking Analyst at CapitalThrough Global Research, told TheSpuzz Online.
Highly disruptive space, hard competitors from Google Pay, PhonePe
Paytm has warded off stiff competitors from international players which includes Walmart’s PhonePe, Google Pay, Amazon Pay and Facebook’s WhatsApp Pay. Upon effective launch of IPO, Paytm would be the biggest such provide. The Rs 15,200-crore Coal India’s IPO launched in 2010 is the country’s biggest public situation to date.
It would be keen to watch if Paytm would seriously get such valuations as the firm is nevertheless loss-creating. The space is hugely disruptive as Paytm is facing hard competitors from Google Pay and Phonepe which have established themselves extremely nicely in the last couple of years. “Currently, very limited deals are taking place in unlisted markets due to low supply of shares. Before the IPO, the company may take corporate action like bonus or shares split,” Abhay Doshi mentioned.
Paytm is one of the established players in the Fintech space with a deep market place penetration and share. The firm, which began as a payments interface, also got into alternate banking by becoming a payments bank.
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