The launch of India’s Paytm initial public offering showed a stunning two-day plunge that casts a shadow over the prospects for technology firms preparing to go public.
Affecting IPO Prospects
This will definitely affect the IPO prospects which have been “on the periphery” and looking to benefit from the flood of transactions.
They may now rethink the timing and pricing of their issues, as per Edelweiss Financial Services Ltd.
This might affect that Payment services firm MobiKwik as it may delay its IPO by a few months due to a lack of demand from investors.
As it has seen a 30%-40% drop in valuation, according to the report.
Dimmed The Mood In Stock Market
It seems that Paytm’s debacle has dimmed the mood in India’s stock market with its benchmark S&P BSE Sensex Index poised to drop five sessions in a row.
This seems to be the longest losing streak since March.
On one side, Paytm’s shares rebounded by as much as 6.5% in early Tuesday trading but the broader gauge continued to fall.
Retail investors, who bought an unprecedented amount of shares in Paytm’s parent One 97 Communications Ltd., saw more than 30% of their value wiped out since the payment firm’s listing on Thursday.
If the stock slumps from its current value, further losses may be in store as of Monday’s closing price of Rs 1,359.6 to the Rs 1,200 predicted by Macquarie Group Ltd.
People To Remain Cautious
According to the managing director and co-head of investment banking at Edelweiss Financial Services, Gopal Agrawal, “The event in a way will nudge people to be cautious and not take the market for granted by blindly placing bets,”.
Further adding, “It is important that a company’s story and prospects are well understood by investors.”
This year, India’s equity markets had been on a tear.
Buoyed by a central bank that slashed interest rates to a record low and millions of new individual investors seeking higher returns in riskier assets.
Interestingly, this rally has encouraged at least half-a-dozen technology startups to seek public listings.
This includes the likes of SoftBank Group Corp.-backed Oyo Hotels & Homes and logistics provider Delhivery Pvt.
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