after its shares crashed on listing last week, and that the company in its history has never had anything easy up front.
The company’s focus on market expansion and the ability of the team to execute the plan will decide the outcome of the company more than anything else, Sharma said in what was a four-hour call on Friday, according to people aware of it. As a publicly listed firm, Paytm has to respect all its shareholders, including retail investors, he said.
Many retail investors who picked shares in One97 Communications, which owns the Paytm platform, are believed to be users of its services.
Paytm’s shares on the BSE fell 27% from the IPO price to close at Rs 1,564.15 on the first day of trading Thursday, giving the company a
market capitalisation of $13.3 billion, lower than its last private market valuation of $16 billion in 2019. The markets had a holiday Friday.
Sharma reiterated during the townhall held virtually that Paytm staff should not get bogged down by the
day-one show and that it was again time to put one’s head down and build as a listed firm.
He was accompanied by the Nodia-based company’s group chief financial officer, Madhur Deora.
The 43-year-old founder said while one million retail investors investing in Paytm meant it had one million more believers, but it also meant it had to live up to the expectation of these investors and keep their faith in the company alive.
Sharma said the company will have its share of ups and downs, but hard work and execution will define its value in the future. He also cited the example of Tesla in the US, which had also tanked on its stock market debut.
A Paytm spokesperson declined to comment.
Sharma’s comments come amid scepticism from some analysts and investors over Paytm’s ability to establish itself as a leader in multiple businesses where it is trying to use its existing base of users to transact more. Besides enabling payments, it is hoping it can use its user base of more than 300 million people to sell financial services products and do more commerce transactions. A report from global brokerage firm Macquarie, which arrived an hour before Paytm’s stock market debut on Thursday, said it has “too many fingers in too many pies” and that it prohibits the company from attaining a clear leadership position in any of them except in digital wallets.
Biggest IPO But…
There are growing discussions whether Paytm rushed its initial public issue and if its urge to launch the country’s biggest IPO at a $20 billion valuation had cost it adversely.
According to multiple sources, including former senior employees of the firm, they are of the view that Paytm didn’t do adequate marketing targeted at all kinds of investors for its public issue and that had an impact on subscriptions from day 1. After the stock market debut, there are discussions if Paytm priced its IPO 30% higher than market expectations and that it needed to explain its path to profitability and overall business plans to investors in a more nuanced manner. Paytm raised more than Rs 8,000 crore from anchor investors, but high-net-worth individuals and many domestic institutions and mutual fund investors stayed away from the issue. Paytm has maintained that it is happy with the “long-term” anchor investors it had got in the IPO.
“In hindsight, it was clearly overpriced and with seasoned bankers in the team, one would expect them (Paytm) to have priced it accordingly,” said a former senior staff of Paytm, who holds shares in the firm received under employee stock options plans. “The IPO has been in the making for a while and it was always part of the plan. To catch the ongoing IPO wave, they seem to have gone overboard on issue size and its pricing,” this person added.
Sources also said while Paytm is a popular brand in India, domestic institutional investors and retail investors had to be made more aware of its business model and concrete future plans going forward. Sharma in an interview to ET after the stock market debut said
Paytm’s business model is relatively less understood by some investors compared to consumer Internet businesses like ecommerce or food delivery.
“These are easy to understand models … If I sell a wallet or a phone, or I can pick up food from a restaurant … then you know the business model compared to how do you (payments) acquire customers? How do you make money and what’s cross-selling like? These are questions asked by the public market investors,” he told ET last week.
In television interviews later on Thursday, Sharma said the market was much wider than some of the investors it had spoken to in its IPO roadshow.