Paytm shares jump another 5% despite denying talks with Adani

Shares of fintech firm One 97 Communications, which runs Paytm, on Thursday rose another 5% as investors continued to buy the counter amid reports of deal talks between Paytm CEO Vijay Shekhar Sharma and billionaire Gautam Adani.

Following Wednesday's 5% rise, Paytm shares hit the upper circuit limit once again today even after the company dismissed the reports.

"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," Paytm said in a regulatory filing yesterday.

A news report mentioned that Adani is also trying to get West Asian funds to invest in Paytm, which has been in trouble after RBI barred Paytm Payments Bank Limited from accepting deposits, credit transactions, or top-ups in any customer accounts, wallets, and FASTags from March 15.

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Paytm expects a near-term financial impact on revenue and profitability, due to disruptions faced in the business in Q4.

"While we experienced a financial impact in Q4 due to the above disruptions, the full financial impact will be seen in Q1 FY 2025. We expect Q1 FY 2025 revenue of ₹1,500 - ₹1,600 Cr and EBITDA before ESOP of (₹500) – (₹600) crore. We are confident of seeing meaningful improvement starting from Q2 FY 2025, based on restarting certain paused products and achieving steady growth in operating metrics," it had said.

While indirectly warning of job cuts, Paytm said it is optimizing cost structure, leveraging AI capabilities, and focusing on core business to achieve significant cost efficiencies. This includes creating a leaner organization structure and pruning non-core businesses, it had said.

Paytm shares have fallen 57% in the last six months with investors expecting the company to turn net profit-positive only by FY29.

Analysts say the biggest challenge for Paytm is the RBI ban. "So I think only if the management change happens and they are able to procure that approval from RBI to get back into the payments bank business that would be a big trigger for the stock. We have a neutral rating right now and we are in a wait-and-watch mode for Paytm," said Siddhartha Khemka of Motilal Oswal.

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