Vijay Shekhar Sharma, poorer by $836 million in two days

After Monday’s 13% plunge, Paytm’s market value has dived below ₹1 trillion, singing investors who piled into the red-hot IPO market. Sharma’s stake in Paytm was valued at $2.3 billion at the IPO price of ₹2,150 per share. Sharma, who founded the company in 2000, holds a 9.1% stake, or 60 million shares, in Paytm. In addition, he also owns 21 million stock options.

On Monday, the stock hit a low of ₹1,271 and declined as much as 20%. However, it recovered from the day’s low to end trading at ₹1,360.30 on BSE, down 13%.

Paytm has eroded ₹51,194 crore in investor wealth from the IPO valuation of ₹1.39 trillion.

The company had allotted nearly 38.3 million shares to 74 anchor investors worth ₹8,235 crore a day ahead of the IPO. After two trading sessions, this investment has been reduced to ₹5,210 crore. The top 10 anchor investors comprising BlackRock, CPPIB, government of Singapore, Mirae Asset, Marshall Wace, Sands Capital, Fidelity, Schroder, Vanguard and Monetary Authority of Singapore have lost a combined ₹2,800 crore, at least on paper. Anchor investors have a lock-in of 30 days.

Ahead of its market debut on Thursday, brokerage Macquarie initiated an underperform rating on the stock and reduced its target price by 40% to ₹1,200 a share, citing Paytm’s lack of focus and direction, while calling the company a cash guzzler. “Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term. Unless Paytm lends, it can’t make significant money by merely being a distributor. We, therefore, question its ability to achieve scale with profitability," Macquarie said in a note to its clients.

On Sunday, Paytm reported an overall gross merchandise value of ₹83,200 crore (roughly $11.2 billion) in October as part of its disclosures to the stock exchanges.

Paytm said its monthly transacting users also grew by 35% to 63 million in October from 47 million a year ago. Its average monthly active users in the September quarter stood at 57 million.

The disclosure, however, did little to calm jittery investors as the stock continued its slide.

Investors now await the September quarter earnings of the firm, which is scheduled to be announced on 27 November.

“The company has a huge customer base with strong brand positioning, and it has an early mover advantage in digital payment services. However, it is still a loss-making company and very aggressively priced. Therefore, we saw a tepid response in terms of subscriptions. It is difficult to value such kind of companies for the time being, but by the time market will understand the way to value such kinds of businesses where the market will focus on is how fast it will become profitable and how well it will use its strength to explore new businesses like credit card and payment banking," said Santosh Meena, head of research, Swastika Investmart