Zomato shares rise on confirmation of ongoing deal with Paytm: One97 stock slides 3%

Shares of foodtech major Zomato and digital payments firm Paytm remained in focus today after confirmation of ongoing talks between the two companies for the latter’s movies and ticketing business. Reacting to the news, shares of Zomato rose up to 1.5%, while shares of One 97 Communications Ltd, the parent of Paytm, slide nearly 3%, paring opening gains.

Early today, Paytm shares opened higher at ₹438, up 3% against the previous closing price of ₹424.90 on the BSE. The stock gained up to 4% to hit a high of ₹442.15, before tumbling as much as 6.4% from the day’s high to ₹413.85. At the time of reporting, shares of Paytm were trading 2.1% lower at ₹416, with a market capitalisation of ₹26,457 crore. The counter hit its 52-week high of ₹998.30 on October 20, 2023, and a 52-week low of ₹310 on May 9, 2024.  

On the other hand, Zomato shares climbed as much as 1.5% to ₹189 against the previous closing price of ₹186.20 on the BSE. The market capitalisation rose to ₹1.65 lakh crore with nearly 7 lakh shares changing hands over the counter in the first two hours of trade so far. The share price of the online food delivery company touched its 52-week high of ₹207.30 on June 13, 2024, and a 52-week low of ₹72.55 on June 23, 2023.

Meanwhile, equity benchmarks Sensex and Nifty touched their respective new record highs today after making positive start. At 11:35 AM, the BSE Sensex was at 77,269, up 276 points, or 0.36%, and the NSE Nifty was trading higher by 79 points, or 0.34%, at 23,544 level.

In a clarification to the exchange on June 16, Zomato confirmed that it was in discussions with Paytm to acquire its movies and ticketing business, but no binding decision has been taken so far. There is a speculation in the market that Vijay Shekhar Sharma-led troubled fintech is looking to sell its movie ticketing and events business as part of its resurrection strategy to improve its profitability.

“We acknowledge that we are in discussions with Paytm for the aforementioned transaction, however, no binding decision has been taken at this stage that would warrant a Board approval and subsequent disclosure in accordance with applicable law,” Zomato says in a BSE filing.

“The above discussion is being undertaken with an intent to further strengthen our Going-out business and is in line with our stated position of focusing only on our four key businesses currently,” it added.

Paytm is facing a serious crisis after the Reserve Bank of India (RBI) ordered Paytm Payments Bank to halt most of its business. After the RBI action, Paytm parent One 97 Communications has witnessed sharp correction in its share price as most brokerages downgraded the stock and cut target prices, citing the central bank’s adverse action. As per the company, the RBI’s action is likely to have a worst-case impact of ₹300-₹500 crore on its annual EBITDA going forward. However, it expects to continue on its trajectory to improve its profitability.

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