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Paytm, the leading fintech and digital payments company in India, has defied expectations by posting a surprise profit in the second quarter of fiscal year 2025. This positive outcome, fueled by a one-time gain from selling its entertainment ticketing business to Zomato, has sent ripples through the financial markets. The deal, finalized in August 2024, saw Zomato acquire Paytm's ticketing business for a substantial Rs 2,048 crore.
While Paytm's overall revenue growth remained strong, the company was initially projected to face a widening of its losses for the July-September 2024 period. Estimates predicted a rise to Rs 660 crore from Rs 290 crore in the previous year's corresponding period. However, the sale of the ticketing business resulted in a significant one-time gain of Rs 1,345 crore, propelling Paytm to a profit of Rs 930 crore. Despite this positive news, Paytm's share price experienced a dip of 5.62% on Tuesday, settling at Rs 685.15, likely due to the impact of the divestiture on its marketing services revenue.
The deal with Zomato marked a strategic move for Paytm, reflecting its intention to concentrate on its core strengths in payments and financial services distribution. The company's credit card distribution witnessed a substantial surge, with 13.8 lakh activated cards, while its travel services continued to exhibit strong momentum. The transaction also included a transition period of up to 12 months during which movie and event tickets will remain accessible through the Paytm app, alongside TicketNew and Insider platforms, ensuring a smooth experience for users and merchant partners. Moreover, approximately 280 employees from the entertainment ticketing business transitioned to Zomato as part of the acquisition.
Source: Zomato helps Paytm make lemonade out of lemons, at least for a while