Paytm denies Adani acquisition rumors

One97 Communications, the parent company of Paytm, has debunked all rumors of their potential acquisition by Adani Enterprises. In a stock exchange filing, he called the news “speculative” and said the company was not in any discussions on the subject.

Reports that Adani is looking to take a stake in the payments company appeared in the Los Angeles Times on May 29, where an anonymous source reported that Paytm founder and CEO Vijay Shekhar Sharma met with Adani at the latter’s office on Tuesday in Ahmedabad to “finalize the agreement arrangements.”

Paytm is currently witnessing a decline in its revenue following restrictions imposed on Paytm Payments Bank Limited (PBBL) by the RBI due to “persistent non-compliance and persistent significant supervisory concerns at the bank”. PBBL received the order:

• Stop further deposits, credit transactions or top-ups
• Stop funds transfers, Bharath Bill Pay and UPI service after February 29
• Closing of One97 Communications Limited and Paytm Payments Services Limited nodal accounts
• Settle all pipeline transactions and node account

Subsequently, in the last quarter of FY24, Paytm saw a weak decline in operating revenue to Rs. 2,267 crore in March 2024 compared to the December 2023 high of Rs. 2,850 crore, down 20% quarter-on-quarter. Similarly, premium profit declined by 15% quarter-on-quarter to reach Rs. 1,288 crore in March 2024 from Rs. 1,520 crore in December 2023. Earnings before interest, tax, depreciation and amortization (EBITDA) before employee stock ownership (ESOP) also declined from Rs. 219 crore in December 2023 to Rs. 103 crore in March 2024. The number of monthly transacting users (MTU) also declined by 24% in April compared to January, from Rs 10.4 cr to Rs 8 cr.

However, in a strategic move, Paytm has decided to create a “leaner organizational structure” by “pruning non-core businesses”, its earnings report revealed. On May 25, Paytm’s affiliate Paytm General Insurance Limited (PGIL) withdrew its application to register as a general insurance company with the Insurance Regulatory and Development Authority of India (IRDAI) to manufacture general insurance products. The company claims that this will help save PLN 500,000. 950 crore which was “allocated for investment in PGIL”. Instead of producing general insurance products, the company said it will focus on distributing insurance products through Paytm Insurance Broking Private Ltd. (PIBPL). This move could indicate a shift towards much more focused business paths for Paytm in the future.

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