Adani Group eyes stake in One97 Communications, say reports; Paytm denies any such talks

   2024-05-28 18:05

Shares of One 97 Communications, parent of Paytm was locked in a 5 percent upper circuit at 359.55 in morning deals on Wednesday after the company clarified that Vijay Shekhar Sharma is not in talks with Gautam Adani to sell stake in Paytm. Meanwhile, Adani Enterprises was almost flat, up 0.7 percent in morning deals.

In a clarification issued on the bourses, it said, “We hereby clarify that the abovementioned news item is speculative and the Company is not engaged in any discussions in this regard. We have always made and will continue to make disclosures in compliance with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.”

A recent report by The Times of India stated that Gautam Adani is reportedly considering acquiring a stake in Paytm. As per the report, Paytm founder and CEO Vijay Shekhar Sharma visited Adani at his office in Ahmedabad on Tuesday to “finalize the contours of a deal.”

If the deal goes through, it will mark the ports-to-airports conglomerate’s entry into the fintech industry positioning it against competitors like Google Pay, Walmart-owned PhonePe, and Mukesh Ambani’s Jio Financial. Prior to this, the Adani Group acquired cement makers ACC and Ambuja Cements, as well as media firm NDTV in FY23. The report indicates that Adani and Sharma have been in discussions for an extended period, with their recent meeting focusing on finalizing the deal’s details.

The report about Adani Group’s potential stake in One97 Communications comes amidst mounting losses for Paytm, exacerbated by the RBI ban on Paytm Payments Bank Ltd (PPBL). The Vijay Shekhar Sharma-led firm reported a loss of 549.60 crore in the March quarter, up from 219.80 crore in the December quarter and 168.90 crore in the same quarter the previous year.

“Our fourth quarter FY24 results were impacted by temporary disruption on account of UPI transition etc. and permanent disruption because of the PPBL embargo. Paytm reported a revenue of 2,267 crore, a modest decline of 3 percent YoY (year-on-year). Our contribution margin was 57 percent including UPI incentives, and 51 percent excluding UPI incentives,” Paytm said in a statement.

Post the earnings, analysts had observed that after facing pressure, Paytm’s merchant payments business began to grow in April and May. However, monthly transacting users (MTUs), which drive the consumer payments business, are down 25 percent compared to January. April was the worst month for MTUs, but the situation stabilized in May. Analysts believe MTU growth will resume once the Third-Party Application Provider (TPAP) commencement occurs.

Additionally, SoftBank has sold its majority stake in Paytm, and Warren Buffett’s Berkshire Hathaway reportedly exited Paytm last year.

Furthermore, the report also suggested that Adani is reportedly engaging with West Asian funds to attract them as investors in One97 Communications, the company that pioneered mobile payments in India.

Vijay Shekhar Sharma holds approximately 19 percent of One97 Communications. He directly owns 9 percent of Paytm and another 10 percent through Resilient Asset Management, a foreign entity. Both Sharma and Resilient are classified as public shareholders according to One97’s stock exchange filings.

Paytm stock has lost 51 percent of its investor wealth in the last 1 year and over 43 percent in 2024 YTD. It shed 3.4 percent in May so far, extending losses for the fourth straight month. It lost 7.5 percent in April, 0.16 percent in March and 47 percent in February. However, it rose 20 percent in January 2024.

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Published: 29 May 2024, 08:51 AM IST

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