Why did the IPO of Paytm have such a bad listing in the market on 18-November?

The weak listing of Paytm was expected after it got subscribed just the 1.89 times. But this is just one IPO, although the correction was much sharper than anticipated at 27%. The listing at 9.3% discount to the issue price was bad to begin with, but the price fell sharply to Rs.1,564 at close against the IPO price of Rs.2,150, a discount of 27.5%. This remains one of the worst listings in memory. But there were several concerns on the IPO.

To begin with, Paytm had shown sustained losses over the last few years, but that is the case with 99% of the digital IPOs. There were concerns over the valuation being too stretched. There were also equity dilution worries due to the Rs.10,000 crore fresh issue component in the IPO. Domestic mutual funds were absent in the anchor placement and Indian markets are not large enough to get a Rs.18,300 crore issue oversubscribed.