New-Age Tech Stocks Continue To Bleed; Nazara Biggest Gainer This Week

Continuing the slump of the previous week, new-age tech stocks witnessed a bearish market sentiment this week as well. Most of these stocks declined in line with the broader market, which came under pressure as the Lok Sabha elections entered the last phase.

Only five of the 22 new-age tech stocks under Inc42’s coverage gained this week in a range of 1% to about 15%. 

The top gainer of the week was gaming major Nazara Technologies, which surged 14.23%. Last week, the company reported a sharp decline in its profit in the fourth quarter of the financial year 2023-24 (FY24). 

Paytm’s parent One 97 Communications Ltd, D2C unicorn Mamaearth’s parent Honasa Consumer, recently-listed B2B travel portal TBO Tek or Travel Boutique Online, and fintech major PB Fintech were the other gainers this week.  

On the other hand, 18 startups saw a decline in the range of 0.4% to 23%. Last week’s top gainer Zaggle, Nykaa’s parent FSN E-Commerce Ventures, TAC Infosec, and DroneAcharya were among the biggest losers this week. 

It is pertinent to note that besides Nazara, the week saw DroneAcharya, TBO Tek, TAC Infosec, Yatra, and Yudiz declare their financial results for the March quarter of FY24. 

The biggest loser this week was blockchain and IT development company Yudiz Solutions. Its shares plummeted about 23% week-on-week to INR 59.30 on the NSE on May 31. The company slipped into the red in FY24 with a net loss of INR 2.9 Cr.

Meanwhile, coworking space provider Awfis made a strong market debut on the BSE and the NSE on May 30.

Awfis’ shares listed at INR 432.25 on the BSE, 12.8% higher than the issue price of INR 383. Similarly, on the NSE, the startup’s shares listed 13.5% higher than the issue price at INR 435 apiece. However, the stock closed the week at INR 402.5 on the BSE. 

Meanwhile, benchmark indices Sensex and Nifty50 fell about 1% each to close the week at 73,961.31 and 22,530.70, respectively. Market experts attributed this decline to “election-related nervousness”. 

“Due to the lack of positive triggers, the bulls faced resistance at higher levels, leading to profit booking across the sector. The caution ahead of the exit poll results… prompted market participants to sideline riskier assets. However, investors are adjusting their portfolios to align with fundamentally strong sectors and stocks, as robust Q4 FY24 earnings and better-than-expected Q4FY24 GDP growth will continue to provide a buffer on valuation in the medium term,” he said. 

On Friday, government data showed that the country’s gross domestic product (GDP) grew 8.2% in FY24. The GDP grew by 7.8% in the fourth quarter of FY24.

Meanwhile, the marathon seven-phase Lok Sabha elections concluded on Saturday (June 1). Following the final phase of voting, almost all the exit polls projected a comfortable majority for the Prime Minister Narendra Modi-led National Democratic Alliance (NDA).

The results for the general elections will be announced on Tuesday (June 4).

Now, let’s take a deeper look at the performance of the new-age tech stocks this week.

The 23 new-age tech stocks under Inc42’s coverage (with Awfis being the latest addition) ended the week with a total market capitalisation of $52.3 Bn as against 22 of them ending the previous week at $53.1 Bn.

Signs Of Revival For Paytm?

Reversing the downward trend, shares of fintech major Paytm gained 5.94% this week. 

The Vijay Shekhar Sharma-led company’s shares hit the upper circuit twice this week. 

In The News For:

• The fintech giant has aborted its plans to foray into the insurance space by pulling back its application for a general insurance licence. 
• The company denied a report which said that Paytm was in talks with the Adani Group for the latter to acquire a stake in the former. 
• Amid a top-level exodus, Paytm’s chief human resources officer (CHRO) Swati Rustagi is now quitting the startup.

Last month, Paytm reported a net loss of INR 550.5 Cr in Q4 FY24, more than 3X from the INR 167.5 Cr loss it reported in the year-ago period.

Brokerage firm YES Securities’ has a ‘buy’ rating on Paytm, with a price target (PT) of INR 450. 

“After being under pressure, the merchant payments business started to grow in April and May. On the other hand, monthly transacting users, which drive consumer payments business, are down 25% compared with January. April was the worst month for MTUs but this has stabilised in May. MTU growth will happen once the TPAP commencement happens,” it said.

Meanwhile, Motilal Oswal retained its ‘Neutral’ rating on the stock after the Q4 results. It has a PT of INR 400. 

Nazara Gains Despite Poor Q4 Show

Nazara was the biggest gainer this week despite a sharp decline in its profit in Q4 FY24. The gaming major reported a steep 98% YoY decline in net profit to INR 18 Lakh in Q4 from INR 9.4 Cr in the year-ago quarter. The decline in the company’s profit was due to the INR 11.37 Cr charges it incurred due to goodwill impairments, along with an INR 10.56 Cr dent for intangible assets related to the gaming segment during Q4.

Operating revenue also declined 8% year-on-year (YoY) to INR 266.2 Cr in Q4 FY24 from INR 289.3 Cr in the same quarter a year ago.

Besides the poor financial performance, its promoter Mitter Infotech also sold 48.84 Lakh shares, or 6.38% stake, to Plutus Wealth Management in an on-market block deal. 

Brokerage firm ICICI Securities maintained its ‘Buy’ rating on the stock, with a PT of INR 1,080. This is a 53% upside from the stock’s last close of INR 702. 

“In Q4FY24 Nazara beat I-sec margin estimates given 729 bps QoQ improvement in Nodwin EBITDA margin… At current valuation (23x one-year forward ex minority EV/EBITDA), we believe Nazara is a compelling BUY,” the brokerage firm said.

PB Fintech Gains On MSCI Index Inclusion

Despite falling in three consecutive sessions at the start of the week, shares of PB Fintech gained nearly 1.6% this week. The stock surged nearly 9% during the last trading session of the week on PB Fintech’s addition to the MSCI Global Standard Index, which was to come into effect from the close of May 31.

In The News For

• On Monday (May 27), the company said that it successfully acquired 100% stake in UAE-based insurance broker Genesis Group
• The company approved the allotment of 48.3 Lakh shares of employee stock option plan (ESOP)
• Last month, the company’s CEO Yashish Dahiya and vice chairman Alok Bansal offloaded more than 83.7 Lakh shares via open market transactions for INR 1,109 Cr ($132 Mn). 

PB Fintech reported a consolidated net profit of INR 60.2 Cr in Q4 FY24 against a loss of INR 9.3 Cr in the previous year’s quarter.

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