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Shares of Paytm parent One97 Communications plunged more than 7 percent after rising during three consecutive trading sessions. General weakness in the broader market also weighed on Paytm’s shares. Nifty50 and Sensex fell about 2 percent today.

At 9:36 am, the stock was down more than 3 percent to Rs 1,740.5 on the BSE, a far cry from the issue price of Rs 2,150. This week, the stock is up more than 11 percent.

Paytm’s IPO had suffered due to soaring valuations, several analysts noted.

One97 Communications is cash intensive and achieving profitable scale is a big challenge, the foreign brokerage warned.

Some market participants believe that new age tech companies are the future and their stocks are worth buying, but not at frothy valuations.

Earlier this week, investor savvy Shankar Sharma said small, loss-making companies with excessively high valuations will eventually have to prove themselves, adding that new-age companies will have to put in “a lot of hard work and a lot of cash burning. “in order to grow in size and scale.

Meanwhile, a news report said several large investors added Paytm shares to their holdings after the shares plunged as much as 41 percent.

BlackRock Inc. and the Canada Pension Plan Investment Board were among the so-called anchor investors in the IPO that bought more Paytm shares on Tuesday and Wednesday, the news report added.

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