India’s biggest-ever IPO Paytm slumps on market debut

Indian mobile payments giant Paytm lost a quarter of its value on its market debut Thursday, after raising $2.5 billion in the country's biggest-ever IPO, as traders questioned whether the loss-making firm would ever turn a profit.

Asia's third-largest economy has been in a grip of an initial public offering frenzy, with start-ups attracting billions of dollars in investment in a bright spot in the Covid-battered economy.

But while Paytm has established a leading position in the fast-growing marketplace for mobile payments it has lost money in each of the past three years and its market debut showed the limits of investor appetite.

Founder Vijay Shekhar Sharma, once named as India's youngest billionaire, wiped away tears from his eyes when the national anthem was played at the opening ceremony before trading began on the Bombay Stock Exchange.

Referring to the phrase  "Bharat bhagya vidhata" --  "the one who will define the fortune of this country" -- he said Paytm has  "actually done that".

But the company's shares tanked more than 25 per cent from their IPO price of 2,150 rupees within minutes of the open, before recovering slightly.

"There is a lot of euphoria for the digital space and that seems to now be subsiding," said SMC Global Securities analyst Saurabh Jain. "These companies are coming out with IPOs at scorching valuations and it's anybody's guess what valuations are correct," he told AFP.

"It is very difficult for a company like Paytm to turn profitable. They have the scalability but they are not able to make money through their business model.

"Following the debut, Paytm's market capitalisation fell from an IPO valuation of $20 billion to under $14 billion when shares dropped as low as 1,586 rupees.