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Paytm upsets investors on its stock market debut, shares plunge 21% in first day of trade

Shares were changing hands at 1,705 rupees in early morning trade versus the offer price of 2,150 rupees.

Paytm upsets investors on its stock market debut, shares plunge 21% in first day of trade

Mumbai: Shares in Paytm plummeted 21% in their market debut, valuing the Ant Group-backed digital payments firm at around 1.11 trillion rupees ($14.9 billion) after it completed India`s biggest-ever IPO.

Shares were changing hands at 1,705 rupees in early morning trade versus the offer price of 2,150 rupees.

Paytm, which also counts SoftBank among its backers, raised $2.5 billion in its initial public offering, of which $1.1 billion was from institutional investors. Last week it received $2.64 billion worth of bids for the remaining shares on offer, or 1.89 times.

Analysts at Macquarie Research said in a note to clients that Paytm`s business model lacked "focus and direction" and initiated coverage with an underperform rating. "Achieving scale with profitability a big challenge," the note said, calling the company a "cash guzzler".

The company, headquartered on the outskirts of India`s capital New Delhi, priced its 85.1 million-share issue at the top of the range at 2,150 rupees each.

Engineering graduate Vijay Shekhar Sharma founded Paytm in 2010 as a platform for mobile recharges. The company grew quickly after ride-hailing firm Uber listed it as a quick payment option in India and its use swelled further in late 2016 when New Delhi`s shock ban on high-value currency notes boosted digital payments.

Paytm`s success has turned Sharma, a school teacher`s son, into a billionaire with a net worth of $2.4 billion according to Forbes. Its IPO has also minted hundreds of new millionaires in a country where per capita income is below $2,000.

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