Attractive valuations, along with capital inflow from FIIs and upbeat corporate earnings season, helped new-age tech stocks make a strong comeback after two weeks of decline
Zomato rallied 18% this week, while geotech platform MapmyIndia surged nearly 9% on the back of positive FY23 results
Nazara Technologies, Tracxn and Nykaa were the only losers among the new-age tech stocks this week
Breaking their two-week losing streak, Indian new-age tech stocks bounced back this week as the broader equity market rose on fund inflow from foreign institutional investors (FII) and positive Q4 numbers of major companies.
Foodtech startup Zomato emerged as the biggest gainer this week among the new-age tech stocks, with the stock soaring 18%.
Geotech platform MapmyIndia surged nearly 9% this week as it posted upbeat financial numbers for the financial year 2022-23 (FY23), while shares of auto marketplace CarTrade jumped 10% on Friday (April 28) after it reported its highest-ever revenue in Q4 FY23.
On a weekly basis, shares of CarTrade rose 7.73%.
Delhivery, EasyMyTrip, Fino Payments Bank, DroneAcharya, IndiaMART InterMESH, Paytm and PolicyBazaar were the other gainers among the new-age tech stocks this week. Meanwhile, Nazara Technologies, Tracxn, and Nykaa were the only new-age tech stocks to end the week in the red.
Experts said after a lacklustre couple of weeks, strong positive cues from the US market bolstered the Indian equity markets this week. Among the benchmark indices, Sensex shot up 2.40% to 61,112.44 this week, while Nifty50 gained 2.31% to 18,065.
“There was a big inflow from the FII side this week and, I think, markets are reacting purely on corporate earnings. While the US Federal Reserve could take up a dovish stance at the May 3 policy meeting, there seems to be no panic in the Indian market. Even if you see the composition of gainers and losers, last week was very good, especially for new-age companies such as Zomato,” Avinash Gorakshakar, head of research at Profitmart Securities, told Inc42
Gorakshakar believes that the correction in valuations of new-age tech stocks in the recent past have made them attractive long-term bets. He added that despite the worries about macroeconomic and geopolitical issues, Indian markets are likely to gain going ahead.
On the other hand, Amol Athawale, technical analyst (DVP) at Kotak Securities, attributed the gains of the indices in the last few trading sessions to declining crude oil prices, besides the Q4 performance of the companies and FII inflows. However, he warned that investors may become cautious in the upcoming sessions and profit booking could also be seen.
Now let’s take a deeper look at the performance of some of the new-age tech stocks this week.
The 14 new-age tech stocks under Inc42’s coverage ended the week with a cumulative market cap of $28.14 Bn as against $26.99 Bn last week.
Zomato Zooms On Positive Market Cues
The foodtech major emerged as the biggest winner this week as its shares surged 18% on the BSE. After beginning the week on a dull note, the stock picked up steam and ended higher in four consecutive sessions.
In the past one month, shares of Zomato have climbed nearly 29% on the BSE. A bevy of brokerage firms have given thumbs up to the firm. Recently, ICICI Securities maintained a ‘buy’ rating for the foodtech major with a DCF-based price target of INR 65. Before this, Motilal Oswal initiated coverage on the stock with a ‘buy’ rating and a target price of INR 70.
The upswing comes at a time when Zomato has been fighting pitched battles with the delivery executives of its quick-commerce arm Blinkit. While the startup last week said that the strike of Blinkit delivery executives had no material impact on the company’s financials, the fallout of the ensuing standoff has seen about 1,000 drivers joining competitors such as Swiggy Instamart, Zepto and BB Now.
Meanwhile, Zomato’s rival Swiggy has introduced an INR 2 platform fee per order for food deliveries as clamour grows for showing profitable numbers.
In another major development, Zomato recently ended its partnership with RBL Bank for co-branded Edition credit cards, and will phase out Classic and Black Edition cards from May 15.
Zomato also seems to be in the middle of another unravelling row involving its restaurant partners in Mumbai. Many restaurateurs in the financial capital have claimed that the company reportedly reduced their delivery radius, right after they refused to comply with Zomato’s demands to increase commissions on average order value (AOV).
Nykaa Swings Like A Pendulum
Shares of beauty ecommerce Nykaa ended in the red, with a marginal 0.08% decline on the BSE, this week when most of the new-age tech stocks surged.
The stock fell to a record low for two consecutive days during the week. However, it recouped some of the losses to end the week at INR 122.75 on the BSE.
Earlier this week, Nykaa announced restructuring of its leadership team following the exit of five senior executives last month. The company welcomed new senior leaders across its technology, business, finance, and marketing teams to spearhead the next phase of growth. Right after that, shares tanked to record lows.
Meanwhile, HDFC Securities slashed the price target on Nykaa to INR 110 from INR 115 and maintained its ‘reduce’ rating. The brokerage said the startup oversold its total addressable market thesis and was struggling with advertising revenue.
However, JM Financial maintained its ‘buy’ rating on the stock with a price target of INR 230, implying an upside of over 90%.
MapmyIndia Cashes In On FY23 Results
After a dull last week, MapmyIndia emerged as the second-biggest gainer this week as the stock shot up nearly 9% to close at INR 1,098.5 on the BSE.
The surge came on the back of its impressive Q4 results. Its profit after tax soared 23% year-on-year (YoY) to INR 107.53 Cr in FY23, while revenue from operations zoomed 1.4X to INR 281.46 Cr during the year.
In a post-earnings call, MapmyIndia CEO Rohan Verma attributed the uptick in business to customer diversification and growing retention rate.
The company’s board also approved a dividend of INR 3 per share for FY23.
However, brokerage Centrum Broking seemed not so impressed with the company’s financial performance. It said that the firm reported weaker-than-expected topline in Q4 FY23 as its revenue remained flat in the automotive and mobility segment.
It must be noted that MapmyIndia is currently involved in a tussle with tech giant Google over its user choice billing system. Under the umbrella of the Alliance of Digital India Foundation (ADIF), the startup is contesting Google’s contentious user choice billing system and has left no stone unturned to make its case.
