Exactly four years ago, between November 8 and November 10, 2021, One97 Communications Ltd launched what was then India’s biggest initial public offering. The IPO of the company behind payments app Paytm comprised a fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore by founder Vijay Shekhar Sharma, Japanese technology investor SoftBank, Chinese ecommerce giant Alibaba’s affiliate Ant Financial, and Indian venture capital firm Elevation Capital.
The IPO was covered barely 1.89 times and Paytm allotted its shares at Rs 2,150 apiece at a valuation of Rs 1.49 trillion, or about $20 billion. But retail investors, mutual funds and others who bought the IPO suffered a shock when Paytm listed on stock exchanges later that month. For, Paytm’s shares cratered 27% on the listing day.
Paytm’s shares kept falling over the following year, as investors fretted about its lack of profitability, its business model and other concerns. By November 2022, the shares had plunged nearly 80%. It wasn’t until this year that the shares began to recover. Paytm’s stock is currently around Rs 1,300 apiece and its market cap is nearly Rs 84,400 crore, or about $9.5 billion. That’s half of its IPO valuation!
But why are we reminding ourselves of Paytm now? Well, that’s because after the fiasco of the first major Indian fintech company four years ago, two more fintech companies are going public this week—stock broker Groww’s parent Billionbrains Garage Ventures Ltd and point-of-sale terminals provider Pine Labs Ltd.
The Groww IPO consists of a fresh issue of Rs 1,060 crore and an offer for sale of Rs 5,572.30 crore at the upper end of the Rs 95-100 price band. The sellers include venture capital investors Peak XV Partners, Tiger Global and Y Combinator, who will all earn multi-bagger returns on their investments—just like Paytm’s pre-IPO investors. Groww, which competes with Zerodha, Angel One and several other stock brokers, will command a valuation of about Rs 61,700 crore in the IPO.
As for Pine Labs, the fintech firm has set a price band of Rs 210-221 a share and is seeking a valuation of up to Rs 25,400 crore. The IPO will raise about Rs 3,900 crore. This includes a fresh issue of Rs 2,080 crore while the remaining is an offer for sale by Peak XV Partners, US-based PayPal and Mastercard, and Singapore’s Temasek.
So, will Groww and Pine Labs go the Paytm way or reward their IPO investors? Well, we aren’t in the business of fortune telling here. But let’s just point out a few things. For one, Groww and Pine Labs seem to be on a much stronger footing than Paytm was at the time of its IPO. Groww, for instance, has emerged as India’s largest stock broker by number of active users despite stiff competition from the likes of Zerodha, Angel One and legacy players like Motilal Oswal and IIFL. (Disclaimer: Kuvera competes with Groww and Zerodha in the mutual fund investment segment).
Meanwhile, Pine Labs has a strong point-of-sale merchant payment business and a payments aggregator business where it competes with Paytm, Walmart-owned PhonePe and Razorpay, among others.
There is one more big difference—both Groww and Pine Labs are already profitable while Paytm was making losses when it floated its IPO. Still, there are some valuation concerns—at least for Groww. On the other hand, Pine Labs has kept its valuation target relatively modest and below the $5 billion tag it achieved in 2022 when it raised private funding.
Overall, the two IPOs add to the flurry of listings in what is likely to be a record year for India’s primary markets this year. Already, the local units of Hyundai and LG as well as non-bank lenders Tata Capital and HDB Financial have floated large IPOs. Eyewear retailer Lenskart and edtech company PhysicsWallah will also float IPOs this month. But, as we keep saying, don’t rush just because everyone else is and do your due diligence before investing.
Ola’s Struggles
Paytm isn’t the only tech startup that has left its IPO investors with a hangover. Another such company is Ola Electric, the electric scooter maker founded by Bhavish Aggarwal.
Ola Electric floated its IPO in August last year, selling shares at Rs 76 apiece. The IPO helped its venture capital investors, such as US-based Tiger Global, India’s Matrix Partners and Japan’s SoftBank mint money. But those who would have invested in the IPO and didn’t sell on the listing day or in the initial few weeks would now be sitting on losses.
The company’s shares jumped 20% on their debut and nearly doubled in August 2024, touching a high of Rs 157.53 and giving it a valuation of almost Rs 70,000 crore. Cut to 14 months later and the stock is now tottering below Rs 50 apiece, valuing the company a shade below Rs 21,000 crore.
This disastrous stock market performance is partly the result of its poor operational and financial performance. The company has lost market share, remains in the red and, this week, slashed its revenue forecast for the current fiscal year.
The EV maker said it now expects revenue for this fiscal year to be between Rs 3,000 crore and Rs 3,200 crore, down from the Rs 4,200-4,700 crore it projected just last quarter and a third lower than last year’s revenue of Rs 4,665 crore.
The company posted a consolidated net loss of Rs 418 crore for the July-September quarter, compared with a loss of Rs 495 crore rupees a year earlier. Quarterly sales volumes almost halved, pulling revenue down 43% to Rs 690 crore.
On the plus side, Ola retained its FY26 gross margin target of 40% for its core automotive business and hopes to reduce operational expenditure next year as it has started fitting its own battery cells instead of importing them.
The focus on profitability instead of sales volume has dragged its market share down. The company, once India’s top electric scooter maker with a share of over 50%, now ranks below TVS Motor, Ather Energy and Bajaj Auto. In fact, Ather Energy—an EV startup that floated its IPO in May—now has a higher market cap of over Rs 24,000 crore as its shares have nearly doubled from the IPO price of Rs 321 to hover around Rs 634 currently.
Clearly, something isn’t going right for Ola Electric. To reduce its reliance on e-scooters, the company has now entered the battery storage market. Will that help in reviving its fortunes? We will keep you posted!
Sales on Fire
Ola Electric may be struggling but India’s auto industry recorded its highest-ever festive sales this year, with a 21% jump in total retail volumes during the 42-day Dussehra-to-Diwali period, according to the Federation of Automobile Dealers Associations (FADA). The standout performer was the passenger vehicle (PV) segment, which saw a robust 23% year-on-year growth, driven by improved supply chains, aggressive discounting, and a GST rate cut on smaller cars announced just ahead of the festive season.
In a breakdown of category performance, two-wheelers surged 22% as rural demand revived amid better crop prospects and easier financing. Commercial vehicle (CV) sales rose by 15%, reflecting steady infrastructure activity and pre-election logistics demand. Tractor sales were up 14%, while three-wheelers grew by 9%. The only laggard was the construction equipment (CE) segment, which declined 24%.
“The GST rationalisation gave the market a psychological push, especially in entry-level segments,” said FADA President Manish Raj Singhania. “Coupled with new launches, improved availability, and widespread promotional schemes, the result was a record festive season.”
This marks a turnaround for the PV segment, which had been stagnating earlier in the year due to inventory pile-ups and high financing costs. Compact SUVs and small hatchbacks led the retail momentum, with urban centres contributing a significant share.
Industry analysts view the festive rebound as a sign of pent-up demand finally being met, but caution that sustaining this momentum into the final quarter will depend on broader macroeconomic conditions and continued policy clarity.
The GST rate cuts came into effect on September 22, so part of the festive sales spike may reflect pre-existing demand. November’s sales data, to be released next month, will better reveal the full impact of the tax cuts.
Smoke Signals
Moving on from individual stocks or sectors to take a broader picture. Markets are at that strange phase where everyone wants to talk about returns, nobody wants to talk about risk, and the charts all go up, until they don’t. On the one hand central banks are hesitatingly cutting rates, citing need to prop growth. On the other, the stock markets have been flirting with record highs. But some are sending smoke signals.
Back home, ICICI Prudential Mutual Fund’s Sankaran Naren, the closest thing Indian markets have to a risk-whisperer, has issued what can only be called a polite but firm “please don’t lose your shirt” advisory. In an interview, Naren says retail investors are carrying the bulk of the risk right now as valuations float away like helium balloons. He isn’t saying the economy is weak or corporate earnings are bad. In fact, he says the macro set-up is good and fundamentals are fine. The problem, he argues, is that someone has to be holding the bucket when the music stops, and increasingly that someone looks like the smaller investor enthusiastically piling into high-priced equities.
“Everyone wants to buy equities at very high valuations,” he says, lamenting the herd mentality of investing in particular asset class.
Thousands of miles away, Jamie Dimon, the CEO of JPMorgan Chase, is singing a surprisingly similar song. His notes though are more high-pitched. Dimon believes the market is dangerously complacent and estimates the chance of a serious market crash is closer to 30%, while investors are pricing it as if there were just a 10% chance. The US market, he warns, is behaving as if every day were a festival of endless gains. High valuations, geopolitical uncertainty, wars, elections, and a technology bubble powered by AI hype are all part of the cocktail. It’s not quite The Big Short sequel, but it’s definitely not The Sound of Music either.
Joining this caution chorus is Michael Burry, the legendary contrarian behind The Big Short.
Burry has flagged stocks like Nvidia and Palantir as bellwethers of an AI-fueled speculative surge, likening the current market fervor to the dotcom bubble of the early 2000s. His concern isn’t about the promise of AI—it’s about the pricing of perfection, where any whiff of narrative is enough to justify soaring valuations.
Market Wrap
India’s stock markets began November with a weekly loss on profit-taking after a 4.5% surge in October pushed benchmark indexes near record highs.
A resumption in foreign outflows also weighed on sentiment, offsetting optimism over corporate earnings and India-US trade negotiations. Foreign portfolio investors offloaded shares worth more than $1.12 billion in the first three sessions of this week after inflows hit a five-month high in October.
Both the Nifty 50 and the BSE Sensex dropped 0.9% this week. The small-cap index fell 1.7% while the mid-cap index was flat. As many as 12 of the 16 major sectoral indexes ended the week lower.
Among sectoral indexes, consumer durables slid 2.6% as Amber Enterprises and Whirlpool of India posted weak results. State-run banks gained 2.1%, lifted by State Bank of India after it topped earnings estimates.
Aditya Birla Group companies Hindalco and Grasim were the biggest losers this week. Hindalco lost nearly 7% after saying a fire at the New York plant of its Novelis unit could hit its 2026 cash flow by up to $650 million.
Grasim slipped 6.6% during the week after Rakshit Hargave, the CEO of its paints business Birla Opus, resigned to join biscuits maker Britannia. Meanwhile, Asian Paints rose 4.1%.
Power Grid Corp, Maruti Suzuki, Adani Enterprises, ITC, Larsen & Toubro, and Zomato parent Eternal were the other major laggards.
Among gainers, non-bank lender Shriram Finance topped the list. Automaker Mahindra & Mahindra came second, adding 5.8% after its quarterly profit surged. HDFC Life Insurance, Bajaj Finance, SBI Life, Bajaj Finserv and SBI were the other major gainers.
Earnings snapshot
- Bharti Airtel consolidated net profit jumps 89% to Rs 6,792 crore
- Grasim Q2 standalone profit rises to Rs 805 crore from Rs 721 crore a year ago
- Mahindra & Mahindra Q2 standalone profit jumps to Rs 4,521 crore from Rs 3,841 crore
- Titan Q2 profit soars 59% to Rs 1,120 crore, beats forecasts
- Sun Pharma profit up at Rs 3,118 crore vs Rs 3,040 crore year ago; tops forecasts
- Aurobindo Pharma July-Sept consolidated net profit rises 3.8% to Rs 848 crore
- IndiGo standalone loss widens to Rs 2,614 crore from Rs 989 crore a year ago
- Britannia Q2 consolidated net profit jumps 23.1% to Rs 654 crore
- Tata Consumer consolidated profit rises 11% to Rs 404 crore, exceed analysts’ estimate
- Adani Enterprises profit before exceptional items and tax falls to Rs 814 crore vs Rs 2,409 crore
- Adani Ports Q2 profit climbs 27% to Rs 3,109 crore on strong cargo volumes
- Urban Company loss widens to Rs 59.33 crore vs Rs 1.82 crore a year earlier
- KFC operator Devyani International swings to loss of Rs 21.9 crore vs year-ago profit
Other Headlines
- Birla Opus CEO Rakshit Hargave to quit, join biscuits maker Britannia
- State Bank of India, French partner Amundi to sell 10% stake in SBI Mutual Fund next year
- MSCI to add Paytm, Fortis, 2 other Indian stocks to flagship global index
- India Services Purchasing Managers’ Index falls to 58.9 in October from 60.9 in September
- India Manufacturing PMI rises to 59.2 in October from 57.7 in September
- Mahindra & Mahindra sells entire 3.5% stake in RBL Bank for Rs 678 crore
- Diageo-owned United Spirits to review investment in Royal Challengers Bengaluru cricket team
- Emirates NBD to launch open offer for RBL Bank on December 12
- Hindalco expects up to $650 million impact from fire at US unit Novelis’ New York plant
- NSE sets aside Rs 1,300 crore to settle pending regulatory cases
- National Company Law Appellate Tribunal lifts WhatsApp data-sharing ban, upholds Meta fine
- Renewable energy firm SAEL Industries files for Rs 4,575-crore IPO
That’s all for this week. Until next week, happy investing!
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