Paytm share price jumps 3% to 52-week high on announcement of stake sale in PayPay Corp to SoftBank
Shares of One 97 Communications, the parent company of Paytm, rose over 3% to a 52-week high of ₹1,007 after announcing plans to sell its stake in PayPay Corporation to SoftBank.
Stock Market Today: Shares of One 97 Communications, parent of fintech firm Paytm, jumped over 3 per cent to a fresh 52-week high of ₹1,007 on Monday, December 9 after the company said it will sell its stake in PayPay Corporation to SoftBank.
Paytm said its wholly-owned subsidiary One97 Communications Singapore Private Limited's board at a meeting held on Friday, December 6 approved the sale of all its Stock Acquisition Rights (SARs) in PayPay Corporation, Japan, to SoftBank Vision Fund 2 entity for net proceeds of JPY 41.9 billion or ₹2,364 crore.
Through this deal, PayPay is valued at JPY 1.06 trillion and accordingly, PayPay SARs held by Paytm Singapore are valued at net proceeds of JPY 41.9 billion (after netting off the exercise cost of SARs), the company said in an exchange filing. The transaction is expected to be closed in December 2024.
Detailing the rationale behind the deal, the company said Paytm Singapore approved the sale of SARs as it has created significant value for the company.
“The SARs sale net proceeds would fortify the consolidated cash reserves of One97 Communications Limited and help drive future business initiatives, focused on maximising value creation for shareholders,” it further added.
Stock Price Trend
Paytm share price rallied for the fourth straight day on Monday, gaining over 9.5 per cent during this period. Meanwhile, from its 52-week low of ₹310, hit in May this year, the stock has surged a whopping 225 per cent. In the last one year too, the stock has delivered an impressive gain of 49 per cent.
This represents a remarkable turnaround for Paytm's stock, which had suffered a sharp selloff earlier this year following the Reserve Bank of India's restrictions on Paytm Payments Bank Ltd (PPBL). The RBI barred PPBL from accepting deposits or top-ups for customer accounts, wallets, or FASTags starting February 29.
Today's rally has propelled the stock above the ₹1,000 mark, surpassing the recent target price upgrades issued by brokerages UBS and Bernstein.
Late last month, global brokerage UBS raised its target price for Paytm to ₹1,000 from ₹490 per share while maintaining a 'neutral' stance on the stock. Similarly, Bernstein also raised its target price for Paytm to ₹1,000 from ₹750 apiece.
UBS in its note highlighted that the next phase of growth will need to be driven by revenue, as most cost optimisation efforts have already been fully realised.
At 10.25 am, Paytm share price was trading at ₹984.75 per share, up 0.92 per cent on the BSE.
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