Why is Pay-TM falling? 

Tuesday, January 11th 2022, The shares came under pressure following news that HDFC Mutual fund, one of the four mutual funds that were anchor investors in its IPO, significantly reduced its holding of Pay-TM across two schemes in the month ended December 2021

Shares of One 97 Communications, which owns the Pay-TM brand, fell sharply by over 6 per cent on Monday to hit its all-time low of Rs 1,151 before closing at Rs 1,157.9 The shares came under pressure following news that HDFC Mutual fund, one of the four mutual funds that were anchor investors in its IPO, significantly reduced its holding of Pay-TM across two schemes in the month ended December 2021. 

The fall

Pay-Tm fell 6 per cent Monday, and they have lost 13 per cent since December 31, 2021. While MF's held 0.81 per cent in the company as of "November 17th 2021" disclosure of reduction in holding by HDFC Mutual fund in the company, weakened sentiment. “When the fund manager believes the stock may continue to trade low over the near to midterm, they book losses and exit,” said a fund manager. A HDFC MF spokesperson declined to comment as fund houses do not comment, on stock-specific investment decisions. Macquarie cut its price target by 25 per cent to Rs 900 from around Rs 1,200, retaining its ‘underperform’ rating. 

The Pay-Tm stock world’s biggest IPO crash? 

Pay-Tm company created a hype of its IPO as it was the biggest IPO in India. They tried to create an environment where everybody oversubscribes their IPO and, they list the share at an unrealistic price and gain a hefty amount out of it. 

Now, considering their performance and their range of products, they kept the price very high. Usually, the company keeps their price more realistic and somewhat discounted as they like to see an upside move in starting and gain investors confidence on the same. 

Pay-Tm made a mistake by overpricing their shares. Their overconfidence got the better of them as the company miscalculated, keeping in mind their business.

Pay-Tm once had a large. The audience which they chartered, but after Google Pay and Phone-PE acquired most of the customers it went on to other platforms to diversify its business. But still, they don't have a monopoly in any business. They are just another competitor for everyone but not the one ruling any section. 

This whole thing plus IPO by other companies played a major role. Every day a new IPO came in where people were already invested and instead of buying such a heavy allotment they went for a more realistic one. Lastly, the result was in front of everyone. 

I know this answer is incomplete if I don't advise what is its future prospective and what others have to say about it. I am not a big player but a close observer. I can see now big players playing their game and bringing it back to the 1800 mark for minimizing their losses. 

There are 4 reasons:

1. The valuation at which the IPO came was very high, so very few wanted to buy Pay-Tm at that valuation. 
2. People who bought for listing gains were disappointed and sold on the first day. 
3. The timing was also wrong, as market sentiment was low at that time. 
4. Pay-Tm does not have a very straightforward plan to profitability, it's just trying whatever it can do but unable to make money till now and there is no clarity when will they turn profitable. They made a loss of 1700 crore in 2020–2021.