Mumbai: As the craze for startups fades, valuations of several new-age companies have taken a beating in the market for unlisted shares, potentially delaying their plans to go public.
According to people involved in the unlisted equity market, the value of PharmEasy, Oyo, Boat, and Ixigo has dropped dramatically in the last six months.
This could make promoters and private equity investors wary of going public with their shares. According to them, the poor stock market performance of Paytm and Policybazaar following their IPOs will also weigh on investors’ minds.
“Domestic investors have realized that if a private equity firm exits a stock, the scope of upside in share prices is extremely limited,” said Rahul Thalia, director of Sarffin Financial Advisors. “Whether it’s PB Fintech NSE 0.20 percent (Policybazaar) or Paytm, they’ve demonstrated that overpriced companies quickly lose investor favor; high valuations are unsustainable in the long run.” Investors are now returning to companies such as the NSE (National Stock Exchange) or the CSK (Chennai Super Kings), where they see more value.”
PharmEasy (API holdings) unlisted shares are trading around Rs 45 per share, versus a high of Rs 145, with expectations of listing day gains driving shares higher. In November, IIFL purchased a large number of shares at Rs 53 and sold the entire holding at Rs 82.
Imagine Marketing Ltd, which owns the Boat brand, has seen its valuation plummet in the aftermath of the company’s proposed share sale. The shares, which were trading at a high of Rs 1,250 a few months ago, are now changing hands at Rs 850-900 apiece.
Oyo, which peaked at Rs 130 six months ago, is now worth Rs 90-95.
“Fancy startup shares have clearly lost sheen as IPO plans have been postponed,” said Tushar Bopche, cofounder of InvestValue Fintech.
“If you have excess funds, investors can still increase their purchases and wait for another round of surge in share prices once the IPO market revives,” he said, adding that “some shares have even corrected in the range of 30-50 percent since their peak when IPO roadshows were on.”
The shares of travel portal Ixigo appear to have lost value in transit, as they are now trading at around Rs 180, down from Rs 220-230 earlier.
According to investment bankers, these valuations reflect a change in fortunes in popular new-age companies in the broader equity markets.
The Paytm stock closed at 655.35, compared to its IPO price of Rs 2,150 in November last year.
PB Fintech is currently trading at Rs 584. During the IPO last November, the shares were sold for Rs 980 each.
