Paytm reports ₹930cr profit in Q2 after selling ticketing business
What's the story
Paytm's parent company One 97 Communications Ltd has posted a whopping profit of ₹930 crore for the second quarter ending September 2024. This is a major turnaround from the ₹290 crore loss posted during the same period last year. The profit jump is largely due to the sale of its ticketing business to Zomato.
Revenue decline
Paytm's operational revenue dips despite profit surge
Despite the massive profit, Paytm's revenue from operations fell year-on-year by 34% to ₹1,659 crore. However, this is a marginal increase from the ₹1,501 crore reported in the first quarter of FY25. Without the gains from the business sale, Paytm would have posted a loss of ₹495 crore for this quarter. The loss is up 70% from last year but a sequential decline of 41% from the ₹840 crore loss in June quarter (Q1FY25).
Business sale
Paytm's ticketing business sale details and financial impact
On August 21, 2024, Paytm had signed definitive agreements with Zomato Limited for the sale of its movie ticketing and events business. The deal also involved two wholly-owned subsidiaries of the company. The total consideration for the transaction was ₹2,048 crore, subject to cash and net-working capital adjustment at closing. The transaction led to a gain of ₹1,345.4 crore for Paytm, reported in their financials as an "exceptional item," turning the company's financials profitable.
Market response
Paytm's financial services revenue and stock performance
Paytm's Financial Services revenue for Q2 stood at ₹376 crore, a 34% quarter-on-quarter increase. The growth was due to an increase in collection bonus in merchant loans owing to better asset quality trends and a higher share of merchant loans. Despite the reported profit for Q2, shares of One 97 Communications fell by as much as 5.6% today to ₹685.