Alibaba’s exit from India’s Paytm may be just the remedy the company needs for its recent woes.
The Chinese e-commerce giant has sold off its remaining stake in One97 Communications, Paytm’s parent company, even as Paytm achieved its first adjusted operating profit in the quarter that ended December, nine months ahead of schedule. This move is a positive for Alibaba, though Paytm’s other Chinese backer, Ant, may have more difficulty cashing out.
Paytm’s stock has been underperforming but has recently seen a boost of over 27% in just four days, following the better-than-expected quarterly results. This allowed Alibaba’s Singapore arm to exit the company at 643 rupees per share, a decent 10% higher than its average purchase price.
With one major Chinese backer out of the picture, Paytm’s prospects of getting a banking license may be improved. However, Ant still owns around a quarter of Paytm, having invested at 1,833 rupees per share, which suggests that Paytm’s stock still has a long way to go before Ant may be willing to sell.
Alibaba’s Exit Brings Relief to Paytm
Alibaba’s decision to exit its investment in Paytm’s parent company, One97 Communications, may be a relief for the Indian financial technology company. This move comes at a time when Paytm is experiencing some difficulties, including underperforming stocks. However, the recent news of the company achieving its first adjusted operating profit in the quarter that ended December, nine months ahead of schedule, has been a positive development.
With Alibaba out of the picture, Paytm’s other Chinese backer, Ant, may have a more difficult time cashing out. Nevertheless, Paytm’s languishing stock has seen an upswing of over 27% in just four days, following the better-than-expected quarterly results. This allowed Alibaba’s Singapore arm to exit the company at 643 rupees per share, a decent 10% higher than its average purchase price.
Improved Prospects for Banking License
Alibaba’s exit from Paytm may have a positive impact on the company’s prospects of obtaining a banking license. With one major Chinese backer out of the picture, Paytm may be more likely to receive regulatory approval. A banking license would allow the company to expand its offerings and increase its revenue streams.
However, Ant still owns around a quarter of Paytm, having invested at 1,833 rupees per share. This suggests that Paytm’s stock still has a long way to go before Ant may be willing to sell. Nevertheless, the recent boost in stock prices may be a positive development for the company, and it may continue to work towards improving its financials and attracting new investors.
The Future of Paytm
Paytm has faced a number of challenges in recent times, including regulatory issues, underperforming stocks, and increasing competition. However, the recent news of the company achieving its first adjusted operating profit ahead of schedule has been a positive development. With Alibaba’s exit from the company, Paytm may have a better chance of obtaining a banking license, which could open up new revenue streams and help the company to grow.
Nevertheless, Ant still holds a significant stake in Paytm, which suggests that the company may have more work to do to attract new investors and increase its stock prices. However, the recent uptick in stock prices following the positive quarterly results may be a step in the right direction. Paytm will need to continue to work towards improving its financials, expanding its offerings, and navigating the challenging regulatory environment in order to succeed in the long run.