new-age tech stocks: New-age tech companies beat odds to regain one-third of market capitalisation

New-age tech companies Paytm, Zomato, Nykaa, Policybazaar, CarTrade and Delhivery have together regained nearly one-third of the wealth investors in their shares had lost last year, thanks to their efforts towards profitability, reducing overheads and also due to rationalisation in their strategy on acquisition.

These half a dozen stocks have gained almost Rs 45,000 crore in market value in 2023, after losing nearly Rs 1.59 lakh crore in 2022. Analysts believe they have caught the fancy of investors over the last two quarters, as there has been some visible improvement in their financial metrics.

“Investors hope for a turnaround in the fortunes of the new-age stocks going forward, which has led to bargain hunting in these counters. We expect the companies to post decent results going forward as the focus has shifted from just growth at all costs to profitability and has a large total addressable market still to tap,” said Manish Chowdhury, head of research at StoxBox.

“Also, an expected funding winter for new ideas in the near to medium term would reduce the competitive intensity, which should ideally be beneficial for their business performance going forward,” he added.

Shares of One 97 Communications, which operates Paytm, have rallied 63% so far this year, after falling 60% in 2022. PB Fintech, the parent of Policybazaar, which fell 53% in 2022, gained 47% in 2023. Zomato shares have recovered 25% this year after losing 57% last year. Delhivery shares gained 15% in 2023, while CarTrade Tech shares rose 2%.

After correcting significantly from their highs, some analysts said, there is some element of valuation comfort and margin of safety in these companies.

According to VK Vijayakumar, chief investment strategist of Geojit Financial Services, traditional valuation parameters don’t apply to new-age companies. “But considering their enormous growth potential for many years to come, their risk-reward is now favourable for investors willing to take some risk,” he said.

Paytm reported healthy March 2023 quarter results with sustained momentum in gross merchandise value (GMV) and robust growth in disbursements. Nykaa posted a sequential improvement in operating margin for the first time in the same quarter, after the seasonally best December 2022 quarter.

This was driven by 36% year-on-year GMV growth. PB Fintech, which posted quarterly revenue of Rs 870 crore, continued its trend of beating estimates by reporting 43% and 61% revenue growth sequentially and from a year earlier, respectively.

(Graphics & illustration by Rahul Awasthi)

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