Paytm’s 1st net income post asset sale to Zomato leaves stock market unimpressed

Paytm reported its first-ever net income, helped by a gain from the sale of its events business as the Indian fintech pioneer fights to rebound from regulatory setbacks.
The company, which trades as One 97 Communications Ltd., reported net income of 9.3 billion rupees ($111 million) in the quarter through September, helped by a 13.5 billion rupee gain, it said in a statement Tuesday. Analysts expected a loss of 6.3 billion rupees. Sales fell 34% to 16.6 billion rupees.
Its shares slid as much as 5.8% before recouping much of those losses in early trade.
Paytm is trying to turn a corner following a regulatory onslaught that sent its stock cratering and raised questions about its long-term prospects. Facing intense competition in digital payments from the likes of Google, it’s fighting to retain users while expanding in areas like loans.
Indian regulators ordered a near shutdown of Paytm’s banking affiliate in early 2024 after years of warnings about unregulated data flows between that unit and the larger fintech. That disrupted the company’s payments processing and much of its overall business, and forced its charismatic founder Vijay Shekhar Sharma to forge deeper partnerships with other Indian lenders. The company still awaits clearances from India’s central bank and a payments body to stabilize much of its business.
Shares of Paytm have recovered much of their losses since a plunge of more than 50% in February caused by the regulatory curbs.
Paytm has since trimmed its workforce, and sold its movie and events ticketing business to Zomato Ltd. for $244 million. That sale is part of the company’s strategy to sharpen focus on areas such as payments, cash-back and distribution of financial services like loans — businesses that are important for broadening its merchant base and increasing revenue.
It also scored a small win in August as it won federal approval to invest in its key payments gateway arm. The investment is a step toward getting a license as a payments aggregator, which has been pending before the Reserve Bank of India since 2022 when it also barred the company from adding new online merchants.
Sharma spearheaded fintech in India with Paytm mobile wallets and then QR codes. He attracted backers including Alibaba Group Holding Ltd. founder Jack Ma, SoftBank Group Corp. boss Masayoshi Son and Berkshire Hathaway Inc. Chairman Warren Buffett, making Paytm India’s most valuable startup at one point.
An ill-fated capital markets debut in 2021 was perhaps Sharma’s first public speed bump, from which Paytm’s stock, still down more than 60% from its listing price, is yet to recover.
Paytm competes with Walmart Inc.’s PhonePe, Alphabet Inc.’s Google and billionaire Mukesh Ambani’s Jio Financial Services Ltd. in India’s crowded digital payments space.