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Shares of India's Paytm fall by another 13% following IPO flop

Shares of India's Paytm fall by another 13% following IPO flop

Shares in Paytm, one of India’s leading digital payment platforms have reportedly witnessed another drop, a day after its flopped $2.5 billion initial public offering (IPO), which was hailed as one of the worst market debuts ever made by a key tech firm.

After a 27% drop during its debut last Thursday, the stock plunged by another 13% Monday, bringing its market value down to approximately $12 billion. Individual investors as well as global organizations, including BlackRock Inc. and the Canada Pension Plan Investment Board, who had acquired company shares oh debut, have been struck hard by the collapse.

One 97 Communications Ltd., Paytm's parent company, had secured a record IPO amount, but its catastrophic market debut spurred criticism that the business and its investment bankers pushed the offering too strongly.

Vijay Shekhar Sharma, Paytm's founder, and CEO, had made it abundantly clear that he wanted the company to break the long-standing IPO record set by Coal India Ltd. in 2010. The Indian markets were closed on Friday due to a holiday.

Paytm revealed financial data for the month of October over the weekend, which includes the crucial week leading up to the Diwali festival. According to the tech firm, for the month, gross merchandise value increased by 131% to ₹832 billion ($11.2 billion). Loan disbursals climbed more than 400% to ₹6.27 billion, which analysts believe is critical to Paytm becoming profitable.

Paytm's prospects have been questioned by critics over the past months. While sales at the firm’s core payments and financial-services division increased by 11% in the fiscal year that ended in March, total revenue fell 10% due to increased competition, the organization started in July.

Even before trading started, investment bank, Macquarie Capital Securities (India) Pvt. Ltd. tagged the firm with an initial ‘underperform’ ratings, setting its target price at ₹1,200, which was more than 44% below the IPO price,.

Despite the setback, Sharma has backed the firm's prospects. Staff who attended a four-hour town hall meeting said he rallied them and encouraged them to see beyond the first-day dip.

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