In a significant market move, Paytm's share price surged by more than 5% following the announcement of its ₹2,048 crore deal to sell its entertainment and ticketing business to food delivery giant Zomato. The fintech leader's stock hit a high of ₹604.45, marking a 5.47% increase, while Zomato shares also saw a 2.71% boost, reaching ₹267.00 per share on the BSE.
One 97 Communications, the parent company of Paytm, has entered into definitive agreements to divest its entertainment ticketing arm, which includes movie, sports, and events ticketing, to Zomato. This move not only enhances Zomato’s ‘going out’ segment but also solidifies its position as a multi-faceted platform poised for future growth.
During the 12-month transition period, Paytm’s movie and event tickets will still be available on its app, after which users will be redirected to Zomato’s upcoming app designed for the ‘going out’ segment. This seamless integration is expected to attract a broader audience, benefiting both companies in the long run.
Industry analysts see this acquisition as a game-changer for Zomato, providing the company with added size and scale in its expanding ‘going out’ business, which could serve as a powerful growth engine over the medium to long term. For Paytm, the deal offers a substantial cash influx, potentially fueling its efforts to reinvigorate its core payment business through an enhanced cashback program.
“Post-acquisition, Zomato’s management estimates the going-out gross order value (GOV) could exceed ₹10,000 crore by FY26. The business is expected to operate near break-even on an adjusted EBITDA basis, with a projected 4-5% adjusted EBITDAM as a percentage of GOV over the medium to long term,” noted Dipeshkumar Mehta, Senior Research Analyst at Emkay Global Financial Services.
Zomato’s strategic acquisition has prompted positive reactions from brokerage firms, with Emkay Global Financial Services maintaining a ‘Buy’ rating on Zomato shares and setting a target price of ₹270 per share.
Meanwhile, Paytm is doubling down on its core payment and financial services operations, with the sale of its ticketing business valued at 6.9x FY24 revenue—a figure that compares favorably to the earlier BookMyShow deal valued at 7.7x FY23 revenue by KKR.
Anand Dama, Senior Research Analyst at Emkay Global Financial Services, commented, “This deal is expected to bolster Paytm’s cash reserves, which could be channeled into scaling up rewards and cashback programs, helping to revitalize its payments business after the recent RBI action. While the net one-off gains will reduce the projected net loss for FY25E, it may impact future earnings.”
This landmark deal between two of India’s tech giants is set to reshape the landscape of entertainment and payments, with both companies eyeing significant growth and innovation in their respective sectors.
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