Shares of One 97 Communication Ltd., the operator of Paytm, rose to their highest level in over six months on Thursday after it said it would sell its events ticketing and entertainment business to Zomato Ltd. Paytm has also slashed the salaries of its non-executive directors.
Paytm will sell its Insider and TicketNew to Zomato Ltd. for Rs 2,048 crore. During the transition period, customers will be able to access ticketing services on its platform, the company said in an exchange filing. The decision reflects One 97 Communication's focus on strengthening its core financial services businesses.
"The transaction generates significant profits for Paytm and further strengthens its balance sheet," the digital payment service provider said.
As part of the deal, Paytm will sell 100% stakes in Orbgen Technologies Pvt. and Wasteland Entertainment Pvt., operators of Insider and TicketNew businesses, to Zomatio Ltd.
The deal is subjected to cash and net working capital adjustments at closing, the company said in an exchange filing on Wednesday. The transaction closure is also subject to satisfaction of the agreed-upon condition precedent, the exchange filing said.
Further, One 97 Communication has clarified that the news that it was seeking shareholders' approval for the appointment of Gulshan Rai as independent director is incorrect. It's not seeking any approval regarding this, and the board has not approved the proposal for Rai's appointment, the company said in an exchange filing.
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Shares of One 97 Communication rose 5.34% to Rs 604.70, the highest level since Feb. 1. It was trading 3.5% higher at Rs 594.25 as of 9:33 a.m., compared to 0.23% advance in the NSE Nifty 50 index.
The stock declined 30.34% and 6.56% on year to date basis. Total traded volume so far in the day stood at 8.6 times its 30-day average. The relative strength index was at 76.31, which implied the stock is overbought.
Out of 17 analysts tracking the company, four maintain a 'buy' rating, six recommend a 'hold,' and seven suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 23.2%
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