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Paytm’s bad start

Photo: ReutersPremium
Photo: Reuters

Its early mover’s advantage of offering a digital wallet, which had held it in good stead after demonetization five years ago, has worn off as rival services based on the UPI such as PhonePe and Google Pay have made major gains in the field of online transactions

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For a company that grabbed our attention for rolling out a mega-sized initial public offering, Paytm’s market debut offered the wrong sort of spectacle on Thursday. Shares of One97 Communications, which owns the payments platform, fell about 27% (after having listed 9% below their issue price). This contrasts with other startups, including Zomato and Nykaa, whose newly listed shares got bumper openings.

Various factors appear to have gone into One97’s big tumble. While startups have been the flavour of the year, with much enthusiasm among retail investors, talk of overpriced shares has made many of them jittery of late. The company has been posting losses, which would not have been worrying if analysts were uniformly bullish on its business prospects. However, its early mover’s advantage of offering a digital wallet, which had held it in good stead after demonetization five years ago, has worn off as rival services based on the Unified Payments Interface such as PhonePe and Google Pay have made major gains in the field of online transactions. Paytm’s e-com play has even stiffer competition. But then, this is too early a stage to call winners. Much can change.

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