Paytm shares down 3%; Deven Choksey says biz deal to benefit Zomato more

Shares of One 97 Communications Ltd (Paytm's parent) on Thursday slipped 3.33 per cent to close at Rs 554 after the digital payments firm sold its entertainment ticketing business to online food aggregator Zomato for Rs 2,048 crore. Zomato shares also settled on a lower note today. The stock shed 0.83 per cent to end at Rs 257.80.

"This deal stands as a testament to the value Paytm has created through its entertainment ticketing business, bringing choice and convenience to millions of Indians with its services and scale," the company stated in a release.

"As part of this agreement, One 97 Communications Ltd (OCL) will transfer its entertainment ticketing business to Zomato by transferring OCL's entertainment ticketing business to its 100 per cent subsidiaries, Orbgen Technologies Pvt Limited (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL); and selling 100 per cent stake in its subsidiaries OTPL and WEPL, which operate the TicketNew and Insider platforms, respectively to Zomato. The transfer will also include 280 existing employees from the entertainment ticketing business," Paytm also said.

On the stock-specific front, Paytm has been under tremendous pressure since Reserve Bank of India (RBI) announced restrictions on Paytm Payments Bank's operations amid persistent non-compliance and continued material supervisory concerns. Although, the scrip has regained some of the lost ground but is still down 13.95 per cent on a year-to-date (YTD) basis.

In contrast, Zomato has delivered mutibagger returns to investors as the counter rallied 107.07 per cent in 2024 so far.

Deven Choksey, MD, DRChoksey FinServ Pvt Ltd, suggested that this deal benefits more to Zomato than Paytm. "Paytm is trying to desperately get out of all the assets where they are not been able to grow. For Zomato, after the success of Blinkit, this particular business is the next one to create an additional hook as far as the return share of customers is concerned. Every customer wants different kinds of services. They started with the food delivery business. They went into delivery through Blinkit and now they are getting into entertainment. They are touching the wallet of the customer in every aspect," the market veteran told Business Today TV.

"Strategically, Zomato is going absolutely right. What is most important out here is how are you leveraging the existing customer base with the platform that you have. And, that's what probably the success would be. Blinkit has walked on the narrative of 10-minute delivery and they've succeeded with that," he added.

"Now, the wallet is touched for the purpose of its entertainment-related spending that every household is doing and that's where the company would have to set up some new narrative. I would remain hopeful and positive on Zomato vis-a-vie Paytm. For Paytm, they are right now still in the activity of repairing their balance sheet," Choksey also said.

"Should they continue to get rid of those businesses that did not grow? Probably, I think that will be the first corrective strategy that we will talk about. Whether it will result in incremental revenue or profits? Not completely sure on that part and it is still far away as far as the results are concerned," he further stated.