MobiKwik, Other Start-Ups May Delay IPO After Paytm Debacle, Says Report

Paytm’s continuous debacle on the Street has dimmed the investors’ mood in the stock market, with several Indian start-ups could rethink on the timing and pricing of their issues

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New Delhi: Paytm’s continuous debacle on the Street has dimmed the investors’ mood in the Indian stock market, with several Indian start-ups could rethink on the timing and pricing of their issues, Bloomberg quoted Edelweiss Financial Services.

Digital payments firm MobiKwik could delay its initial public offering (IPO) by two to three months and could even push it to the next financial year as it struggles to get foreign institutional backers at the right valuation, the Economic Times newspaper said on Tuesday.

The Grurugram-based fintech start-up had filed its draft papers for a Rs 1,900-crore IPO in July this year. Markets regulator Securities and Exchange Board of India (Sebi) approved the papers in October. MobiKwik was eyeing to launch the IPO on November 4. However, the process got delayed.

According to Bloomberg, retail investors, who bought an unprecedented amount of shares in Paytm'’s parent One 97 Communications, saw more than 30 per cent of their value wiped out since the payment firm’s listing on Thursday. Further losses may be in store if the stock slumps from its Monday closing price of ₹ 1,359.6 to the ₹ 1,200 predicted by Macquarie Group.

“The event in a way will nudge people to be cautious and not take the market for granted by blindly placing bets,” said Gopal Agrawal, managing director and co-head of investment banking at Edelweiss Financial Services. “It is important that a company's story and prospects are well understood by investors.”  

Bloomberg research pointed out that companies in the South Asian countries have raised about $15 billion through IPOs this year, already an annual record by total proceeds. However, some critics have been questioning valuations on some of these IPOs, given they are still loss-making firms.

“The Covid-19 pandemic led to huge technology adoption in the country that got priced into the valuations of many technology companies,” said Ashutosh Sharma, vice-president and research director at Forrester Research Inc. In a statement to Bloomberg, he said, “Is this the beginning of a downward trend? I don’t know. But going forward, investors will look cautiously on the risks and business future of tech companies.”