Sunil Mittal is seeking a stake in Paytm by merging his financial services unit into the fintech giant’s payments bank, according to people with knowledge of the matter.

Mittal seeks to fold Airtel Payments Bank into Paytm Payments Bank in a stocks deal and is also seeking to buy Paytm shares from other holders, the people said, asking not to be identified discussing private information. Talks are in early stages and Airtel and Paytm may not reach a deal, the people added.

Shares of Paytm, formally known as One 97 Communications Ltd., have rebounded about 40 per cent from its record low in November as it shows signs of turning profitable. The company narrowed its third-quarter loss after a drive to add customers boosted revenue, it said in an exchange filing this month.

“We remain fully focused on our strong organic growth journey and are not involved in any such discussions,” a representative for Paytm said in an email statement. A spokesman for Bharti Enterprises Ltd., controlled by Mittal, said the company won’t comment on market speculation.

Convincing investors

Once India’s most valuable startup, Paytm has never traded above its IPO price of ₹2,150 since its listing in November 2021 and had the worst first-year share plunge among large IPOs over the past decade. The company’s backers include Japan’s SoftBank Group Corp. and China’s Ant Group Co. 

Mittal’s six-year-old payments bank had 129 million customers and had turned profitable in the year to March 31, 2022, exchange filings show. 

Paytm is growing its product offering to attract more customers, seeking to convince investors of its earnings potential. Eight brokerages have either a buy or overweight recommendation on One 97 Communications, with a consensus 12-month price target of ₹944.64, according to data compiled by Bloomberg.