Mumbai: Shares of One97 Communications, ‘s parent company, plunged as much as 13% on Wednesday as the mandatory 30-day-lock in period for the anchor investors in its initial public offering ended on Tuesday.
The stock declined to its lowest level of ₹1,297.70 before closing at ₹1,380.05 on Wednesday, down 7.7% over the previous day’s closing price. Paytm shares are trading 36% lower than its offer price of ₹2,150.
About 1.3 crore Paytm shares were traded on the NSE and BSE combined compared to the previous 10-day average volume of 12 lakh shares a day. Paytm had raised ₹8,235 crore by allotting 3.83 crore shares to 74 anchor investors as part of its initial public offering of ₹18,300 crore.
Top sovereign wealth funds and financial investors such as Singapore’s GIC, Canada’s CPPIB, BlackRock, Alkon Capital, Abu Dhabi Investment Authority were among those who have picked up a stake in the fintech major’s parent One97 Communications’ anchor slot. With the restrictions on the sale of shares that these institutions got in the issue ending, they are free to sell their holdings in the open market.
Anchor investors are institutions that are offered a portion of shares in the qualified institutional buyers’ segment a day before the IPO.
Brokers said some of these investors cut losses on Wednesday though the exact amount of their selling could not be ascertained.
Paytm’s initial public offering (IPO) was the largest ever issue to kick-off domestic bourses. The company raised ₹18,300 crore via primary bourses between November 8 and 10. The issue managed to scrape through but many investors gave it a miss because of expensive valuations. High net worth individuals bid for 24% of the shares set aside for them.
Paytm shares plunged 27% on debut. In the next trading session, the stock dropped by as much as 19%.
Analysts suggest avoiding the stock even after the recent sell-off.
“Paytm share is expected to touch the levels of ₹1,100 in next few trading sessions,” said Ravi Singh, vice-president and head of research, Share India. “Existing investors may hold their positions with a stop loss of ₹1,150. Fresh buy should be avoided at the current juncture.”
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