paytm IPO, should you hold or sell one97 communications share after listing

               

View on One97 communications, paytm stock

When Paytm's IPO came with IPO in the Indian market, there was a lot of enthusiasm among the investors and traders and in the grey market, the premium of 150rs per equity share was getting to the IPO of Paytm but like hey Paytm's IPO was getting less When the subscription started getting, the premium for Paytm's IPO also started getting less. Paytm was being considered as the biggest IPO in the history of Indian stock market, but the valuations were kept very expensive, due to which Paytm's IPO did not get such a good response. Paytm IPO had subscribed 1.89 times. Company had received bids for nearly 9.1 crore equity shares against offer size of 4.83 crore equity shares. The portion of retail investors was subscribed nearly 1.66 times and non-institutional investors were subscribed 24 %. The bidding portion of qualified institutional buyers was 2.79. Government of Singapore portion also comes under institution investors .Subscription data was not as per expectation.

Also read:  SJS enterprises IPO should you hold or sell after listing

 Should you hold or sell Paytm Share

  One97 communications share,

The IPO bidders will defiantly think that should they hold or sell paytm share after IPO listing or should they buy it if get the opportunity .We will try to find out the answer in different steps after calculating the risk factors involve in paytm share. After this analysis you will find out whether you should hold Paytm share or sell it after IPO listing.

Negative Points for Paytm Stock price after IPO listing:

First Reason:

Expensive valuations

The first reason was that the price of Paytm's IPO was brought to very high valuations. In which nothing was left on the table for retail investors. Paytm's IPO price band was fixed at Rs 2,080 to Rs 2,150 per equity share. Which seemed expansive from day one, but considering the value of the company's brand, everyone was advised to apply. If Paytm's management had offered a discount of 5% to 8% to retail investors, then probably Paytm's IPO would have got a good response, but no one understood why the company's strong management did this.

Second Reason:

IPO Issue Size

The issue size of Paytm's IPO was changed frequently and in the end the company's management entered the Indian market with a bigger issue. If the company is strong, then it does not mean that the money should be raised and the IPO should be brought in the stock market at higher valuations. Take a look at the history of the Indian IPO market, whenever a company has brought a huge IPO in the Indian market, then the IPO of that company has not received good response. A few years ago, companies like Reliance Power, Coal India had also brought big IPO issues in the Indian market, but today their share price is trading at Kha, we all know that. Paytm's IPO had a fresh issue of 8,300 crore and an offer for sale (OFS) by existing shareholders worth 10,000 crore. The total IPO size of Rs 18,300 was launched by Paytm Company in the market. It was not so easy to oversubscribe such a big issue.

Third reason:

Debit & Financial results

Paytm Company is under debit. If we will track the financial results of the company then we will find that paytm is making losses from last few years. Company could not recover from the losses.

If we will calculate then At upper band of Paytm , after issue launched, around 45 times sales to market noticed  which is very expensive. Also there is no clarity on future profitability of the company. It also looks challenging. Company revenues are decreasing in paytm consumer services segment, In FY19 it was nearly 1085cr which decreased in Q1FY2021 & Q2FY22 and reached to 208cr & 300cr respectively. Total revenues recorded in FY21 were 969cr nearly. From the Financial services & payment segment which more contribute to the company business, this segment had reported total revenues from operations in FY19 1695cr But in FY21 company recorded 2108cr nearly. If we will calculate Total revenues from operations from all segments of the one97 communications-paytm company then In FY 19 total revenues was nearly 3232cr which deceased   by almost 432cr in FY21 and reached to 2800cr. EBITDA margin of the company is still negative in FY21 which is (-59%).

In this way after calculation paytm is valued at 49.6x at its FY21 revenues on upper price band of 2150rs per share.

Fourth Reasons:

Big competition to paytm Company

Almost a decade ago, Paytm Company established a online platform for mobile recharging but company had shown good growth in the beginning & quickly become the first choice of the youngsters. But later many other companies came into the market & companies like Amazon, PhonePe, or other online platforms are giving good competition to the paytm

in 2016 when Indian government  banned  on high value currency bank notes in India then it had given big  boost to  digital payments & paytm took good benefit of it. But still Company could not come into the profit here is a big question? Even company has strong management but still not recovering from the losses, it is also a worry factor.

We may see Negative to Flat Paytm IPO listing 

If Paytm IPO list at discount IPO price:

Then follow this strategy

After calculating all the above factors, Paytm Share price looks very expensive If Any investors or traders get profit from the paytm stock after IPO listing then it is advisable to book profit.

But  Don’t be panic if you will not get listing gain hold the Paytm stock or one97 communications share with the stoploss of 2035rs on closing basis for long  investment point of view. If Paytm stock will list on discount price or even on bit positive side then big investors may try to book the profit and traders will try to drag the stock price at the reasonable valuations in the coming days.

If Paytm IPO opens higher:

 Follow this strategy

 If Paytm stock gets open 5% to 8% up from the higher IPo price band of 2150rs the it should be list around 2200rs or 2205rs in this case raise you stoploss to 2185rs

Should you buy paytm share after IPO Listing?

One97 communications share

One97 Communications has main focus on the growth of financial services business. Company has also motive to attract consumers and merchants who will have limited access to financial services products. More collaboration’s with financial institutions for financial service will be the motive of the company in the coming years by offering latest technology

More businesses like Paytm Postpaid , buy now or pay later, wealth management offerings etc services with  collaboration with its financial partners will be on the radar of the company. As per the sources, company is also planning for Paytm Payments Bank to expand the suite of banking solutions for consumers and merchants.

Investors or the shareholders of paytm should keep one thing into the mind that above all expansions plans will not implement into few days or weeks it will take few months or may be few years.  If any investors want to buy the Paytm share or one97 communication share after IPO listing then it is better to buy on dip of at least 8% to 12% so that long term investors could also earn some gains in the longer run. As paytm IPO issue was too big in size, so it will not be easy for traders to drag Paytm share at lower levels very soon but soon or later after profit booking Stock of paytm may come on lower side as part of profit booking the it will be the best chance to add this stock into your portfolio for long term i.e 1 to 2 years or more point of view.

Long term target of Paytm Stock:

If Paytm stock gives opportunity to take entry at lower levels after correction then long term target of paytm stock may be around 2380rs to 2480rs + in coming months. Note that these price targets in One97 communications share even after listing or after profit booking into the stock. It is better entering in this stock after profit booking.