Even as the Indian stock markets touched their all-time highs this week, new-age tech stocks largely continued to witness range-bound movements and selling pressure was visible in most of these counters.
Eleven out of the 19 new-age tech stocks under Inc42’s coverage slumped between 0.2% and over 25% this week, with Paytm being the biggest loser.
Others, including Nykaa, CarTrade Technologies, PB Fintech, Fino Payments Bank, and Yudiz, also saw a downfall.
While Zaggle remained unchanged on a week-on-week basis, only seven new-age tech stocks gained this week.
Tracxn Technologies was the biggest gainer this week, rising 3.3%, even as Elevation Capital offloaded more than 15.66 Lakh shares of the company via block deals worth INR 15.09 Cr on Friday.
Meanwhile, DroneAcharya, Zomato, and IndiaMart gained over 3% each this week, while ideaForge and Nazara Technologies rose over 2% each.
Following Fireside Ventures’ partial stake sale in the recently-listed Mamaearth, the D2C unicorn’s shares remained almost flat (0.1% gain) on a weekly basis.
In the broader market, benchmark indices Sensex and Nifty50 gained in the first three sessions of the week following the BJP’s victory in assembly elections in the Hindi heartland states of Rajasthan, Madhya Pradesh, and Chattisgarh. The indices dipped slightly on Thursday but regained momentum to end Friday’s trading session at an all-time high.
The rally during the last trading session of the week came following the Reserve Bank of India (RBI) raising its FY24 GDP growth forecast to 7%.
Overall, Sensex gained 3.47% to end the week at 69,825.6 and Nifty50 rose 3.5% to end at 20,969.4.
It must be noted that the RBI kept the repo rate unchanged at 6.5% over concerns about inflation.
“Despite the RBI maintaining policy status quo, an upgraded GDP growth forecast for FY24 (6.5% to 7%) boosted investor confidence. Measures to address the liquidity deficit… positively impacted financials, leading to a 5% gain in Nifty Bank for the week,” said Vinod Nair, head of research at Geojit Financial Services.
“Mid and small caps continued to outperform, driven by a healthy economic outlook, strong Q2 earnings, and corrections in oil prices,” he said.
Meanwhile, Prashanth Tapse, senior VP (research) at Mehta Equities, said that despite overbought technical conditions, the short-term technical outlook for the markets continues to be in favour of the bulls.
Now, let’s take a look at the performance of some of the major new-age tech stocks this week.
The total market capitalisation of the 19 new-age tech stocks under Inc42’s coverage stood at around $38.35 Bn at the end of this week as against $40.32 Bn last week.
Regulations Hinder Paytm’s Bull Run
The fintech major became the biggest loser this week as its shares tanked over 25% following its decision to scale back its loan disbursement business.
In The News For
Following a media report that said Paytm was temporarily halting its Postpaid loan operations, the fintech giant clarified in an analyst call that Postpaid loan operations will continue, but it is stopping the service for a cohort of users which avails small-ticket loans below INR 50,000. It must be noted that below INR 50,000 loans account for a majority of Paytm’s BNPL business currently.
In an attempt to compensate for this change, Paytm said it would increase its focus on “lower-risk and high credit worthy customers”, hence bolstering the merchant and personal loan disbursements.
Following the company’s announcement, several brokerages, who were earlier bullish on Paytm’s growth, cut various near and mid-term estimates for Paytm.
In the next trading session following the announcement, shares of Paytm nosedived 19% to touch the INR 660 level, which was last seen in May this year.
Falling further, the shares ended the week at INR 651.9, a level last seen in April this year.
Goldman Sachs cut its rating on Paytm to ‘neutral’ from ‘buy’ while slashing the price target (PT) to INR 840 from INR 1,250 earlier. The brokerage now expects Paytm to turn profitable in FY26 as against its earlier outlook of FY25.
Cutting its PT to INR 1,120, JM Financial said that near-term growth in Paytm’s lending business and thus, its financial services revenue, is likely to be impacted.
Of the 16 analysts covering the stock, 11 currently have a ‘buy’ or above rating while five rate the stock as ‘hold’.
SoftBank Exits Zomato
SoftBank’s SVF Growth (Singapore) offloaded 9.36 Cr Zomato shares, or 1.1% stake in the company, in an INR 1,127 Cr block deal on Friday.
SVF’s exit comes right after Chinese payments group Alipay exited the food tech major by selling its entire 3.44% stake last week.
The shares sold by the Japanese investor were lapped up by Invesco, ICICI Prudential Insurance, Goldman Sachs (Singapore), Kadensa Capital, Morgan Stanley Asia Singapore, and others.
Following SVF’s stake sale, shares of Zomato tumbled 1.6% on the BSE on Friday to end the week at INR 119.9.
However, the bullish trend in the stock continues. Despite Friday’s decline, Zomato managed to gain 3.14% this week. The stock is currently trading above its listing price on the back of the company reporting two consecutive profitable quarters.
In a research note published last month, ICICI Securities increased its PT on the stock to INR 164 from INR 160 earlier, which now implies an upside of almost 37% to its last close.
“We believe the company is likely to achieve its medium-term adjusted EBITDA guidance of 4-5% in food delivery and adjusted EBITDA breakeven in Blinkit by Q1 FY25,” said the brokerage.
Stake Sale Begins In Mamaearth
In its first major bulk deal, Honasa Consumer’s early backer Fireside Ventures sold 60.89 Lakh shares of the company, or a 1.89% stake, this week.
Though Mamaearth doesn’t immediately face any major selling pressure from major pre-IPO investors as most of them are under a six-month lock-in period, the likes of Fireside Ventures and Stellaris Venture are not under the lock-in.
Following the stake sale, shares of the D2C unicorn remained range-bound and ended 0.1% higher this week at INR 400.05 on the BSE.
Last week, the stock had slumped 16%.
Currently, the shares are trading 23.47% higher than the listing price.
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