New age stocks see Rs 2.5 trillion erosion in market cap

A clutch of new age technology companies has lost nearly Rs 2.5 trillion (roughly $20 billion) in market capitalisation since listing on the exchanges. Shareholders have been disappointed by either poor performance or unwieldy acquisitions. In some instances, the sale of stakes by investors post the expiry of the lock-in period, has dragged the stock down.

Although Paytm reported smaller losses of Rs 571 crore sequentially in the September quarter and a revenue growth of 14% to Rs 1,914, the arrival of new competition has also prompted analysts to become more cautious. For example, analysts at Macquarie believe that Jio Financial Services “can pose a significant growth and market-share risk” for players such as Paytm and Bajaj Finance. Paytm has launched a buyback of shares at Rs 810 apiece, about 60% lower than its IPO price, but that has not enthused shareholders.

Also Read: Mcap of 10 most valued firms erodes by Rs 1.68 lakh cr; Reliance biggest drag

Also Read

Share Market Highlights: Nifty closes shy of 18500, up 0.97%, Sensex settles 635 pts higher; Page Industries tanks 13%

Adani Enterprises stock still 30% away from recovering Hindenburg loss; how far are other Adani group stocks?

GLOBAL MARKETS-Equities rise on US debt deal hopes; Treasury yields also gain

Page Industries share price tanks 13% after Q4 net profit falls 59%; Should you buy, sell, hold?

The stock is trading at Rs 476.40, less than a fourth of its IPO price of Rs 2,150.

In mid-October, a cautionary outlook from Delhivery sent the stock crashing. The company had said that while the festive season sale surge in shipment volumes will spill over to the third quarter as well, it anticipates moderate growth in shipment volumes through the rest of the financial year. Delhivery’s losses narrowed sequentially to Rs 254 crore in Q2FY23 but revenues grew at a marginal 3% to Rs 1,796 crore. Analysts at ICICI Securities have trimmed their revenue growth estimates “meaningfully” by 16% for the current year and by 23% for FY24.

Nykaa’s performance in Q2FY23 was a shade below expectations since the net profits came in at just Rs 5.5 crore, due to the fallout of the inflationary pressures. Analysts at Jefferies pointed out that despite the fashion business being at an early stage, a low single digit q-o-q growth is a disappointment. “It reflects management focus on measured growth rather than adopting an aggressive stance of chasing growth at any cost,” they observed.

Several investors sold their holdings post the expiry of the lock-in period, a factor that weighed on the stock. The company attempted to reward investors with a bonus issue. However, the move attracted criticism since the record date of November 11 coincided with the date of the expiry of the lock-in of November 10.

Also Read: US Stock Market: 10 highest market cap companies

In case of Zomato, the Street is anxious that the Blinkit acquisition will pull down the company’s performance. Analysts at Jefferies wrote recently that scepticism on quick commerce was high “given no proof of concept yet in any large market in the world”. While many of the key metrics registered improvements, the food delivery player reported a larger net loss of Rs 301.6 crore for the September quarter compared to Rs 262.5 crore in the June quarter. Worryingly, the company has laid off 3% of its workforce.

Investors have also been miffed with CarTrade Tech, which posted losses in the September and December quarters of 2021 and in the March 2022 quarter. Although the company reported profits in the June and September quarters, the stock is trading at around Rs 446, or half the levels of its 52-week high of Rs 912.75. Analysts at Kotak Institutional Equities trimmed their earnings estimates for FY23–FY25 and maintained their ‘reduce’ recommendation on the stock.