Fintech giant Paytm has firmly denied reports suggesting that the Adani Group is in talks to acquire a stake in its parent company, One97 Communications.
Clarification on Speculative News
According to a report by the Times of India, Paytm founder and CEO Vijay Shekhar Sharma was purportedly seen meeting Adani Group chairman Gautam Adani in Ahmedabad to discuss the details of the potential deal. However, Paytm swiftly dismissed these claims as speculative.
“With reference to the captioned subject (Adani in talks with Sharma to acquire stake in Paytm), 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,” stated One97 Communications in an exchange filing.
Potential Market Implications
If such a deal were to be negotiated successfully, it would signify the Adani Group’s entry into the fintech sector, positioning it against established players like Google Pay, Walmart-owned PhonePe, and Mukesh Ambani’s Jio Financial. Despite the denial, the speculation around the potential deal had a noticeable impact on Paytm’s stock, which traded 5% higher at INR 359.55, up from the previous close of INR 342.45.
Financial Performance and Challenges
Paytm recently reported a significant increase in net losses, which widened over three times year-on-year to INR 550.5 Cr in Q4 of the financial year 2023-24 (FY24), compared to INR 167.5 Cr in the same period the previous year. This marked the first quarterly results post the Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank, preventing it from onboarding new users and offering various services, including UPI payments and deposits.
Revenue from operations also saw a decline, dropping 2.9% year-on-year to INR 2,267.10 Cr from INR 2,334 Cr the previous year, and a 20% decrease from the previous quarter.
Strategic Adjustments Needed
Amid these financial challenges, Paytm is navigating significant hurdles, particularly with its payments bank and leadership transitions. To regain stability and investor trust, the company may need to reassess its business model, streamline operations, and emphasize innovation and customer-centric solutions.
