- Shares of One 97 Communications, parent of Paytm, surged 5% to ₹359.55 in morning deals on Wednesday.
- The rise followed a clarification from the company that Vijay Shekhar Sharma is not in talks with Gautam Adani to sell his stake in Paytm.
- Meanwhile, Adani Enterprises saw a modest increase of 0.7% in morning trading.
Paytm shares jump 5% after clarification on stake sale rumors involving Gautam Adani.
Paytm Denies Stake Sale Talks with Adani Group
In a statement issued to the bourses, Paytm clarified that the news about Vijay Shekhar Sharma negotiating a stake sale with Gautam Adani is speculative. The company emphasized its commitment to making disclosures in compliance with SEBI regulations.
Market Reaction to Clarification
The clarification led to a positive market reaction, with Paytm shares hitting the upper circuit limit. This comes amidst ongoing speculation about potential strategic moves by the Adani Group in the fintech sector.
Adani Group’s Strategic Moves
Reports had suggested that Gautam Adani was considering acquiring a stake in Paytm, marking the conglomerate’s entry into the fintech industry. This would position Adani Group against competitors like Google Pay, PhonePe, and Jio Financial. The Adani Group has previously acquired stakes in ACC, Ambuja Cements, and NDTV.
Financial Performance and Challenges
Paytm has been facing significant financial challenges, reporting a loss of ₹549.60 crore in the March quarter. This was a sharp increase from ₹219.80 crore in the December quarter. The losses were attributed to disruptions caused by the UPI transition and the RBI ban on Paytm Payments Bank Ltd (PPBL).
Analysts’ Perspective
Analysts noted that Paytm’s merchant payments business began to recover in April and May. However, monthly transacting users (MTUs) saw a decline, with April being the worst month. Analysts believe that MTU growth will resume once the Third-Party Application Provider (TPAP) commencement occurs.
Investor Movements
SoftBank has sold its majority stake in Paytm, and Warren Buffett’s Berkshire Hathaway exited the company last year. Additionally, Adani is reportedly engaging with West Asian funds to attract them as investors in One97 Communications.
Conclusion
The recent developments highlight the dynamic nature of the fintech industry and the strategic maneuvers by major players like the Adani Group. While Paytm faces financial challenges, the company’s clarification on the stake sale rumors has provided some relief to investors. The future outlook remains contingent on regulatory developments and strategic partnerships.
