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MUMBAI : Paytm’s initial share sale made a subdued start on Monday, garnering a mere 18% subscription, as large investors stayed away from the country’s biggest public issue yet.

The 18,300 crore initial public offering (IPO) of One97 Communications Ltd, which owns Paytm, concludes on Wednesday.

According to stock exchange data, as of 5pm, the retail investor portion was the most subscribed at 78%, while the portions reserved for institutional investors and high net-worth individuals were subscribed just 6% and 2%, respectively.

To be sure, while recent tech IPOs such as Nykaa and Zomato saw strong investor rush on their opening day itself, they were much smaller than that of Paytm.

Paytm has priced its shares at 2,080-2,150, valuing the company at 1.39 trillion at the upper end of the price band. The share sale comprises a fresh issue of 8,300 crore and an offer for sale (OFS) of up to 10,000 crore.

The OFS comprises a sale of shares worth up to 402.65 crore by Paytm’s founder Vijay Shekhar Sharma; up to 4,704.43 crore by Antfin (Netherlands) Holdings; up to 784.82 crore by Alibaba.com Singapore E-Commerce; up to 75.02 crore by Elevation CapitalV FII Holdings; up to 64.01 crore by Elevation Capital V Ltd; 1,327.65 crore by Saif III Mauritius; 563.63 crore by Saif Partners; 1,689.03 crore by SVF Partners and 301.77 crore by International Holdings.

The record-setting IPO has received a mixed response from analysts, who have called it a good bet to ride India’s fintech wave, but also pointed out that the pricing of the shares appears to be expensive. “At the upper end of the price band, Paytm is valued at 49.7 times FY21 revenues. While valuations may appear expensive, Paytm is well-positioned to benefit from the exponential growth in mobile payments between FY21 and FY26 and, hence, valuations are justified," said Jyoti Roy, equity strategist at Angel One Ltd.

Paytm had negative cash flows from operating activities for FY19, FY20 and FY21, primarily due to operating losses and additional working capital needs. “Any negative cash flows in the future could adversely affect the results of operations and financial condition," said analysts at ICICIdirect.

Aswath Damodaran, professor of finance, Stern School of Business, New York University, wrote on his 4 October blog that given almost all of the value of Paytm comes from future expectations, and there is significant uncertainty on every dimension, it should come as no surprise that the range on estimated value is immense, with a 3% chance that the firm’s equity is worth nothing to more than 2 trillion (approx $27 billion) at the 90th percentile.

“Even if you strongly favour the company and find it undervalued, it would be hubris to concentrate your portfolio around this stock. In other words, this is the type of stock that you would put 5% or perhaps 10% of your portfolio in, not 25% or 40%," he said.

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