Shares of Paytm rose more than 3 percent to a 52-week high of Rs 1,007 on Monday after its Singapore-based subsidiary approved the sale of stock purchase rights (SARs) to Japanese payments company PayPay. The transaction, valued at JPY 41.9 billion (about Rs 2,364 crore), is expected to significantly improve Paytm’s consolidated financial position.
The SARs were first acquired by Paytm Singapore, a subsidiary of One97 Communications, in September 2020. The rights will now be sold to SoftBank Vision Fund 2, which valued PayPay at JPY 1.06 trillion. After deducting the exercise costs, the deal will deliver a solid return on Paytm’s investment.
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The proceeds from this transaction will support Paytm’s cash reserves and strengthen its financial base. The sale is expected to be completed in December 2024, subject to corporate approvals and customary conditions. Paytm’s board cited the huge value created by SARs as a key factor in taking the decision.
Summary of financial performance
Paytm reported a consolidated profit of Rs 928.30 crore for Q2 FY25, a significant turnaround from a net loss of Rs 290.50 crore in the same period last year. However, revenue from operations fell thirty-four percent year-on-year to Rs 1,659.50 crore in the September quarter.
Paytm’s market trajectory
Paytm, the leader in India’s digital payments ecosystem, has been instrumental in driving the adoption of QR-based payments across the country. Its innovative services and growing profits have boosted investor confidence, contributing to the recent rally in its stock price.
With this transaction, Paytm aims to further strengthen its market position and financial health, ensuring continued momentum in its growth trajectory. The company’s valuation gains from the sale of SARs highlight its ability to unlock value from strategic investments, reinforcing its focus on long-term growth and sustainability.
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