New-Age Tech Stocks Ride The Bull Run In Broader Market, Nazara Stumbles On GST Shock

New-age tech stocks rallied this week on the back of the rally in the broader Indian equity markets this week.

Of the 15 new-age tech startups under Inc42’s coverage, nine rallied this week in a range of 0.08% to over 17% on the BSE. MapmyIndia emerged as the biggest winner with a gain of 17.4% during the week.

Meanwhile, Zomato jumped 12.6%, while EaseMyTrip also recovered significantly as its shares rose 6.7%. Delhivery and PB Fintech rose over 5.6% each during the week. Besides, CarTrade Technologies, IndiaMart InterMESH, Nykaa, and Paytm also rose.

On the other hand, Nazara Technologies emerged as the biggest loser this week. The stock fell 7.7% during the week, hurt by the GST Council’s decision to levy 28% tax on real-money gaming on full face value.

ideaForge, which made a bumper stock market debut last week, saw its shares slide 7.1% this week, while DroneAcharya fell 5.4%.

Fino Payments Bank, Tracxn Technologies, and RateGain were the other losers this week.

Benchmark indices Sensex and Nifty 50 touched new record highs this week at 66,060.9 and 19,564.5, respectively. Sensex ended Friday’s session 0.77% higher, while Nifty 50 gained 0.78%.

Overall, both the indices gained 1.2% during the week.

“The index touched yet another new high… Global cues too were supportive following the release of another soft inflation data. In the US, the PPI inflation rose only 0.1% MoM in June, leading to hopes that Fed may soon take a pause,” said Siddhartha Khemka, head of retail research at Motilal Oswal.

“Going ahead, the market would keenly watch out for merged HDFC Bank results on Monday which now holds 29% weightage in Nifty Bank. As we fully enter into the quarterly earnings season, stock specific action would pick up steam. Moreover, expectation of good quarterly results, consistent buying interest of FIIs and good progress on the monsoon front would keep the overall trend of the market positive,” he added.

Meanwhile, Pravesh Gour, senior technical analyst at Swastika Investmart, said that the Monsoon Session of Parliament, which would commence on July 20, would play a crucial role as several bills, including the Personal Data Protection Bill and the Forest Bill, are to be presented. 

Now, let’s understand better how the new-age tech stocks performed this week.

The 15 new-age tech stocks under Inc42’s coverage ended the week with a total market capitalisation of $34.38 as against $33 Bn last week.

Nazara The Biggest Loser

Shares of Nazara Technologies, which have been seeing a sharp rally since May this year, plunged 7.7% to INR 666.75 on the BSE this week, making it the biggest loser.

The shares were impacted by the government’s decision to levy 28% GST on online gaming, along with horse racing and casinos. The online gaming sector has strongly criticised the move, saying it would make the industry ‘disappear’,

After rising on Monday, ahead of the GST Council meeting, Nazara shares declined in the next three consecutive sessions.

Meanwhile, Nazara came out with a statement on Wednesday saying the 28% GST rate would have minimal impact on its overall revenue as it would apply only to the skill-based real money gaming segment of our business. 

As per the company’s statement, skill-based real-money gaming contributes only 5.2% to its consolidated revenue.

Its shares ended Friday’s session marginally higher.

The company was also a signatory to a letter written by over 100 gaming startups and a few industry bodies, released on Saturday, urging the government to reconsider the decision to levy 28% GST on full value.

Commenting on the stock, Jigar S Patel, senior manager, technical research analyst, at Anand Rathi, said it looks positive on the charts. 

The buying range for the stock would be around INR 650-INR 670, while support for the stock is at around INR 625. The stock can reach INR 720-INR 725 level in the coming days, he added.

Helped by an overall positive sentiment towards the new-age tech stocks, Nazara shares are trading 15% higher year to date (YTD).

Zomato Touches Fresh 52-Week High 

Shares of foodtech startup Zomato saw a fresh rally this week as they gained in all five sessions. The shares hit a fresh 52-week high of INR 84.5 during intraday trading on Thursday. 

Zomato was the second biggest gainer this week among the new-age tech stocks, rising 12.6%. It ended Friday’s session at INR 82.47 on the BSE.

Shares of the food delivery giant have seen a significant recovery since March this year on expectations of it reaching its net profitability target. Overall, Zomato is up 39% YTD.

With a market cap of INR 70,752.56 Cr, Zomato is now among the top 100 stocks in terms of market cap on the BSE. 

Anand Rathi’s Patel expects Zomato to continue its upward trajectory. “The buying range for the stock is INR 81-INR 83 and the stop loss is INR 75 on daily closing basis,” he said, adding that Zomato’s upside can be till INR 91-INR 92.

Meanwhile, the startup is doubling down on its branding. Recently, it launched a new campaign with a chat show series hosted by founder and CEO Deepinder Goyal, which would feature restaurateurs as interviewees.

Delhivery Allots Fresh ESOPs

Delhivery on Tuesday announced allotting 17,28,427 shares as Employee Stock Option Plans (ESOPs). Consequent to the allotment, the paid-up share capital of the company stands increased to INR 73.3 Cr from INR 73.1 Cr, said the logistics unicorn.

This week, Delhivery shares gained 5.7% to end Friday’s session at INR 415.6 on the BSE. After a fall in two straight sessions till Wednesday, the shares jumped 5.6% in the next two sessions.

Meanwhile, Emkay Global Financial Services initiated its coverage on Delhivery this week with a ‘buy’ rating and price target (PT) of INR 465. The PT implies an upside of almost 12% to the stock’s last close.

The brokerage expects the logistics major to clock revenue CAGR of 24% over FY23-FY26 to reach 7.8% adjusted EBITDA margin and achieve profit after tax turnaround in FY26.

“Delhivery provides an infallible opportunity to ride the long-term structural growth story in India’s logistics space,” said the brokerage.

The initiation came days after Kotak Institutional Equities downgraded Delhivery to ‘reduce’ rating from a ‘buy’ rating, and postponed the cash flow break-even estimate for the company to FY27.

Commenting on the stock, Patel said that it looks bullish on technical charts. 

The buying range for the stock would be INR 410-INR 420, while stop loss should be INR 399. The stock can rally till INR 440-INR 445 in the coming days, he added.

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