Paytm Shares: Why Blame Solely Paytm? These 18 D-st Debutants Have Tumbled 40-65%

By Author: Ricky Kirpalani
Total Articles: 24
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New Delhi: Recently-listed One97 Communications, the parent company of Paytm, has been in the spotlight for eroding investor wealth. However, the stock is not an exception! 17 others have been wiping off investor money in the latest phase of correction on D-Street.

Out of 60 stocks on the BSE IPO Index, 18 stocks have dropped between 40 per cent and 65 per cent from their highs since listing. About half of the stocks in the index have wiped out one third of the investors’ wealth, the data from Ace Equity shows.

Market experts said that the rout in global tech stocks, aggressive pricing, pure offer for sale issues, rich valuations, FII outflows, inflationary concerns and uncertainty due to the Russia-Ukraine war are adding pressure on the latest debutants.

Ricky Kirpalani, Lead Sponsor, First Water Capital Fund (AIF) said that it is not unprecedented, as exuberance followed by a lull in the primary markets is typically seen every few years.

“The correction in certain new listings has resulted from a deflation in IPO valuations that were stretched. Markets have been undergoing a reality check ...
... and it is not surprising that the frothiest stocks have been correcting,” he added.

CarTrade Tech tops the losers’ list with a 66 per cent fall. The script, listed in August 2021, has dropped to Rs 547.6 on March 14, 2022 compared to its highest price of Rs 1,610.

It is accompanied by One97 Communications, which also has tanked 66 per cent to Rs 675.35 from Rs 1961.05. The company was listed in November 2021.

Listed about a year ago, Suryoday Small Finance Bank has eroded 62 per cent of the investors wealth. The script settled at Rs 112.95 on Monday from Rs 295.95 in March 2021.

Interestingly, all the three counters were listed at discounts and have not even hit their issue price thus far. This means, the fall is more severe compared to the issue price.

Market experts suggest that investors should reduce exposure to most new-age companies as the selling pressure could continue for a while on the back of their pricey valuations.

Startups including Zomato and PB Fintech have eroded more than half of investors’ wealth from their recent peak. Fino Payments Bank and Krsnaa Diagnostics have also plunged more than 50 per cent.

The recovery in stocks will depend upon the underlying business and the valuation of the stock, said Neha Khanna, Director, ValPro, a tech based investment banking platform. “There should be recovery but overpriced stocks will continue to languish.”

Retail investors should be cautious to subscribe to IPOs only after careful analysis, cautioned Khanna. “The upside in some of the tech stocks may already be taken by venture capitalists pre-listing.”

Paras Defense And Space Technologies, Nazara Technologies, Windlas Biotech, FSN E-Commerce Ventures (Nykaa) and Railtel Corporation of India have slipped between 45-50 per cent from their post listing peaks.

RateGain Travel Technologies, Latent View Analytics, AGS Transact Technologies, Glenmark Life Sciences, Hindustan Media Ventures and Tega Industries are other players to fall more than 40 per cent.

ETMarkets.com Other companies including Vijaya Diagnostics, AMI Organics, GR Infraprojects, Barbeque-Nation, Go Fashion, SJS Enterprises, Exxaro Tiles, Dodla Dairy and Laxmi Organics have wiped out one third of investors wealth from their peaks. ETMarkets.com Market participants said that understanding business fundamentals, peer comparison, the business model, strength and moats, compounding growth in revenue, sustained margins and the IPO price to understand possible upside is key.

Akhil Rathi, Vice President Advisory at Marwadi Financial Services, said that the recovery in some of these stocks which are backed by strong products and revenue visibility in upcoming quarters is expected.

“Investors should wait and watch the company’s upcoming earnings and outlook to enter into these stocks, ” he added. “Long term investors should accumulate the stocks in parts, as we might see continued volatility in the near future.”

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