New-Age Tech Stocks Slump This Week On Macroeconomic Worries, Delhivery Biggest Loser

Indian new-age tech stocks slipped significantly this week amid a slump in the overall stock market due to fears of further rate hikes by the US Fed and inflationary pressure back home. 

Of the 14 new-age tech stocks under Inc42’s coverage, 11 stocks, including Paytm, Nykaa, CarTrade Technologies, EaseMyTrip, Nazara Technologies, and PB Fintech, fell in the range of 0.6% to 6%. Delhivery was the biggest loser this week.

However, DroneAcharya, MapmyIndia, and Zomato gained on a weekly basis, rising 2.3%, 2.2%, and 0.2%, respectively, during the week.

In the broader equity market, benchmark indices Sensex and Nifty50 fell 1.13% to 59,135.13 and 1.03% to 17,412.90, respectively, falling in the last two consecutive sessions of the week.

The market was closed on Wednesday (March 8) on the occasion of Holi.

Retail inflation in India surged to 6.52% in January, the highest in three months. The inflation data for the month of February is set to be released on Monday (March 13). While inflation is seen easing in February, it is expected to remain above the Reserve Bank of India’s target. 

Meanwhile, US Fed Chairman Jerome Powell signalled this week that the interest rates in the country may stay higher for longer.

“The sentiment has been bruised by the recent US Fed statement that more rate hike is on the card to keep inflation under control, which could fuel recession fears going ahead. Technically, the Nifty has formed a strong bearish candle on weekly charts,” said Amol Athawale, deputy vice president, technical research at Kotak Securities.

Analysts expect the volatility in the market to continue next week as well due to the release of inflation data and the US Fed meeting.

Now, let’s dig deeper into understanding how the new-age tech stocks performed this week.

The 14 new-age tech stocks under our coverage ended the week with a total market capitalisation of $26.49 Bn as against $27.41 Bn last week. 

Delhivery The Biggest Loser

Shares of logistics unicorn Delhivery slumped 5.9% this week, ending Friday’s session at INR 321.5 on the BSE.

After rallying significantly for a month, the shares started falling last week after SoftBank offloaded 2.8 Cr Delhivery shares worth INR 954.2 Cr in multiple block deals on March 1.

The volatility continued this week and the shares fell in three out of four trading sessions. It must be noted that high inflation has already dented consumer spending, adversely affecting logistics players like Delhivery. 

Ganesh Dongre, senior manager, technical research, at Anand Rathi, believes that one can go long on the Delhivery stocks with a stop loss of INR 290-INR 295. The target is INR 350 for the stock in the next few weeks.

“While the stock is in the selling zone, its biggest support is at INR 310,” he said

Nykaa’s Competition Increases

With Reliance Retail entering the beauty retail market with a dedicated platform Tira, Nykaa is set to face heightened competition. 

The Tira app is expected to go live in the coming weeks, with Reliance also planning to unveil its first Tira store in Mumbai.

Brokerage Macquarie initiated its coverage on Nykaa this week with an ‘underperform’ rating and said that the entry of big players like Tata Cliq and Reliance Retail in the beauty vertical can exacerbate the problems for the company.

It also noted that Nykaa already faces risks to its beauty segment margin as growth moves to smaller towns/ offline and heightened competition.

Shares of Nykaa shares fell in the first three sessions of the week but ended Friday’s session 1.4% higher from the previous close at INR 142.3 on the BSE. Overall, the beauty ecommerce startup’s shares declined 4.9% this week.

Macquarie has set a target price of INR 115 on Nykaa, which implies a downside of 19.2% to the stock’s last close.

Commenting on the stock, Dongre said that Nykaa is currently trading sideways and has taken support at around INR 136 multiple times. “If it moves above INR 150, a fresh long position can be taken for INR 160-INR 170 target,” he said, adding that the support for the stock is around INR 135-INR 130 zone.

Paytm Makes Fresh Allotment Under ESOP Plans

Paytm on Friday (March 10) announced allotting 20,576 equity shares with a face value of INR 1 apiece to its eligible employees. Consequent to the allotment, the issued, subscribed and paid-up equity share capital of the fintech major increased to INR 649,354,963 from INR 649,334,387.

It must be noted that ESOP costs continue to be a major expense for the company. Paytm reported an EBITDA, without ESOP cost, of INR 31 Cr in Q3 FY23. It claimed to have achieved its target of EBITDA profitability minus the ESOP cost during the quarter.

Paytm was the third biggest loser this week, falling over 5.5%. The stock ended Friday’s session at INR 593.1 on the BSE, down about 2.2% from Thursday’s close.

“Right now, profit booking is going on in the stock. So, we will wait and not go long in this counter,” Dongre said. 

He also said that a long position can be taken in the range of INR 530-INR 550, with a stop loss of INR 500.

On the operations front, Paytm Payments Bank Limited (PPBL) went live with UPI LITE recently.