Why is the Reserve Bank looking at Paytm with suspicion, read the details

Paytm

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country’s largest IPO (IPO)Fastest Growing Fintech Company, Face of India’s Successful Startup, Digital Payment Company Paytm (paytm) By narrating some similar tales when its IPO was launched. Investors were encouraged and encouraged to invest in IPO, but now investors who have invested in IPO seem cheated. The IPO with an issue price of Rs 2150 has fallen by 72 percent. That is, for every 100 rupees invested by the investors, now only 28 are left. Investors even at the time of IPO launch (Investors) Had a cold response.

Investors suffered a loss of 26 percent on the very first day

Most of the upcoming IPOs at that time were picked up by investors, but Paytm’s IPO could not be subscribed even 2 times. Most institutional investors had stayed away from it, but there was a strong buying enthusiasm among retail investors and the same enthusiasm forced them to invest money in the loss making company.

But as soon as it was listed in the stock market, Paytm started falling. On the very first day, IPO investors suffered a loss of about 26 percent. The share had come down to Rs 1586. Global brokerage company Macquarie had termed Paytm’s business model as directionless and gave the stock a price of Rs 1,200, which was 44 percent less than the issue price, calling the stock an underperformer.

Those who came first, they survived

On the very first day, due to the fall in the stock of Paytm, the IPO investors who came out cautiously. They didn’t suffer that much. As much as the loss is happening to those investors who are still maintaining investments. On Tuesday, the stock touched a low of Rs 584. Now even the joke of Paytm’s share is flying on social media. The name of the parent company of Paytm is One97 Communication. People are jokingly saying that the fair price of Paytm is only Rs 197.

In January this year, brokerage company Macquarie reduced the target of Paytm to Rs 900 and about a month ago to Rs 700. The quarterly results of the company were also declared in February itself and a loss of Rs 780 crore was shown.

Paytm accused of money laundering and ignoring KYC rules

But the worst phase was yet to come for Paytm and that phase started on Friday night. Reserve Bank banned Paytm Bank from adding new customers. Along with it also directed to conduct audit. Paytm was also accused of money laundering and ignoring KYC rules. The matter was not settled yet. Manish Verma, a representative of the company’s big investor Soft Bank, left the company. What was there. The further beating of the stock started and on Tuesday the price came down to Rs 584.

Now the big question. Will the stock break even further? Broking company Macquarie believes that RBI’s steps will not have much impact on Paytm’s business. The target of Rs 700 was given by Macquarie for Paytm. It has been retained for the time being.

Morgan Stanley downgrades Paytm’s rating

Morgan Stanley also believes, in the near future, the environment of volatility will be manageable. But regulatory uncertainty will continue to dominate the share price. Morgan Stanley has reduced the target of the share of Paytm to Rs 935 and has also lowered the rating.

Wherever the price goes further. But the loss to the investors of Paytm has raised many questions about the role of SEBI regarding the issue price fixed at the time of IPO. Perhaps this is the reason that after all the criticism, now SEBI has started tightening the rules regarding IPO valuation. That is, the good thing about Paytm’s IPO is that the regulator has woken up. Which may protect IPO investors in future.

Harsh Chauhan, Money9

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