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Paytm stock down 70% from IPO price as FPIs dump shares on retail investors

Shares of One97 Communications Ltd, the parent entity of mobile payments and financial services company Paytm, have eroded nearly 70% of their value from the IPO issue price. Paytm shares listed on NSE at Rs 1,950 per share, a 9% discount as compared to the issue price of Rs 2,150 apiece. As of the latest close, the stock stood at Rs 642.

In the year 2022 so far, the shares have lost more than 51% of their value. A major reason behind the fall in Paytm’s share price seems to be the exit of foreign investors amid sustained financial losses made by the company.

Before the Paytm shares were listed on November 18, 2021, the company had 127 foreign portfolio investors (FPIs) holding 6.71 crore equity shares representing a 10.37% stake in the company.

The shareholding pattern of Paytm as of the quarter ended September 2022 shows that the FPIs have dumped 44% of their holding, or 2.97 crore shares, in the company so far since its IPO. FPIs now hold only around 3.74 crore Paytm shares.

Moreover, the number of FPIs in Paytm has also declined to 88. As per the latest shareholding pattern, Morgan Stanley Asia (Singapore) is no more on the list of shareholders of the company, as its ownership may have fallen below the 1% mark. It held a 1.21% stake in Paytm during its IPO.

On the contrary, the shareholding of retail investors in Paytm has increased significantly. Retail shareholders are those investors who invest less than Rs 2 lakh in a stock. Such retail shareholding in the company has increased to 6.37% at the end of September from 2.79% at the time of listing.

Moreover, mutual funds also have hiked their stake in Paytm to 1.26% from 0.81%.

It is to be noted that there is a mandatory one-year lock-in period for pre-IPO investors. This period for Paytm investors ends in mid-November, meaning there could be further selling by such investors. This may act as a near-term overhang on the stock.

The Rs 18,300-crore worth Paytm IPO was the then-largest ever in the country. The IPO comprised a fresh issue of shares worth Rs 8,300 crore and an offer for sale (OFS) of shares worth up to Rs 10,000 crore. The company sold shares at a price band of Rs 2,080 to Rs 2,150 per share in the IPO.

On BSE, Paytm shares debuted with a market capitalization above Rs 1 lakh crore. At last close, mcap was down to about Rs 42,000 crore.

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