It was a good day for new-age businesses on the bourses today with Nykaa making a blockbuster debut, almost doubling on listing day, and fintech major Paytm’s IPO, country’s largest ever, getting fully subscribed after a slow start.

The home-grown fintech firm’s ₹18,300-crore public issue has beaten state-run miner Coal India’s ₹15,199-crore IPO.

Nykaa m-cap at ₹1-lakh cr

FSN E-Commerce Ventures, owners of Nykaa, listed at 78 per cent premium on the BSE at ₹2,001 against the IPO price of ₹1,125. The market capitalisation surpassed ₹1-lakh crore on the first day of listing itself, as the stock closed at ₹2,206.70.

It listed at a premium of 79 per cent on the NSE at ₹2,018 apiece. It closed with a gain of 96.30 per cent at ₹2,208 on the National Stock Exchange.

The company made it to the top 100 companies by m-cap on the BSE, ahead of SBI Cards and Payment Services Ltd and Coal India. At closing, its m-cap stood at ₹1,04,360.85 crore.

Paytm sails through

Things looked up for Paytm on the last day of the issue, thanks to a late-hour buying by foreign institutional investors. The IPO, which comprised issuance of fresh equity shares worth ₹8,300 crore and an offer-for-sale (OFS) of ₹10,000 crore by existing shareholders, was subscribed 1.89 times on final day. The issue had been subscribed just 18 per cent on Day 1 and 48 per cent on Day 2. The IPO price band was fixed at ₹2,080-2,150. The portion reserved for Qualified Institutional Buyers (QIBs) was subscribed 2.79 times with FIIs being the key buyers.

Thumbs down by HNIs

The portion reserved for non-institutional investors was under-subscribed as it received just 0.24 times. However, the Retail Individual Investors portion got a relatively good response being subscribed 1.66 times.

Ahead of the IPO, the company had raised ₹8,235 crore from 122 anchor investors by allocating 3.83 crore shares at ₹2,150 a share.

In the case of Paytm, the expensive pricing of the IPO and an uncertain future have been the cause of a tepid start, according to experts.

“A lot depends on the future plan about the new services that they are planning to come up and whether they will be in profits, or again, in a loss-making business for some more time. So, it is very difficult to make a call on a company like Paytm,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Both (Nykaa and Paytm) are new-age businesses and both are risky, but the good part about Nykaa is that is a profitable business with a good growth perspective. But valuation is still a concern, despite good fundamentals,” said Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

For Nykaa, “the possibility to sustain these prices on the coming quarters will depend on their ability to come into higher profit and higher top-line growth. Today, the market hopes that their revenues continue to grow,” said Nair.

With no peers to compare, valuations will remain a concern for investors in such businesses, according to experts.

“There’s a frenzy for new-age businesses. So the market is ready to pay a higher valuation and the market can in a bull market,” said Meena.

“No one is able to justify the valuation and no one is able to write value for such companies because there are no peers to compare,” added Meena.

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