New-Age Tech Stocks Witness A Mixed Week; Nykaa Biggest Gainer, Nazara Slumps Over 7%

New-age tech stocks saw a mixed week amid the ongoing volatility in the overall Indian stock market, where a hoard of factors including the Union Budget 2023-24, Q3 FY23 results of companies, and the slump in stocks of Adani Group drove the broader market sentiment.

Shares of seven of the 14 listed tech startups under Inc42’s coverage rose this week, gaining in the range of 3%-12%. Nykaa emerged as the biggest winner, gaining 12.4% on the BSE. Zomato, Paytm, EaseMyTrip, and Fino Payments Bank were among the other stocks which rose this week.

On the other hand, RateGain, Tracxn Technologies, Delivery, DroneAcharya were among the stocks which fell this week. Nazara Technologies turned out to be the biggest loser, declining about 7.5% on the BSE.

Fino Payments bank, MapmyIndia, and Paytm reported their Q3 results this week, which were largely on the positive side.

MapmyIndia’s net profit surged in the December quarter on both a yearly and quarterly basis to INR 29.66 Cr, while operating revenue rose 56% year-on-year (YoY) to INR 67.66 Cr. Meanwhile, Fino Payments Bank’s net profit increased 35% YoY to INR 19.1 Cr, with total income rising 14% to INR 314.1 Cr during the quarter.

Paytm’s loss narrowed almost 50% YoY to INR 392.1 Cr in Q3 FY23, and the fintech major claimed that it achieved its target of becoming EBITDA positive, excluding employee stock options (ESOP) cost, during the quarter.

Among the benchmark indices, Nifty50 gained 1.4% to 17,854.05, while Sensex rose 2.5% to 60,841.88 this week. 

“The positive takeaway was that the benchmark Nifty will now aim to reclaim the psychological 18,000 mark in the week ahead. Besides uptick in banking stocks, buoyancy in Adani group stocks such as Adani Enterprises, Adani Ports and Ambuja Cement led the rebound,” said Prashanth Tapse, research analyst, senior VP (research) at Mehta Equities, on Friday’s performance. 

Now, let’s take a better look at the performance of some of the listed tech stocks from the Indian startup ecosystem.

The 14 new-age tech stocks under our coverage ended the week with a total market capitalisation of $24.42 Bn as against $23.45 Bn last week.

Paytm Claims To Be EBITDA Positive Minus ESOP Costs

Shares of Paytm continued to remain volatile this week ahead of its quarterly results, which were published after market hours on Friday. 

On Friday, shares of Paytm fell 3.8% to INR 524.9 on the BSE. However, on a weekly basis, its shares gained 2.2%.

In the News For:

• Paytm reported a 50% YoY and 31% sequential decline in its net loss to INR 392.1 Cr in Q3 FY23, while its operating revenue jumped over 41% YoY to INR 2,062 Cr. The fintech giant claimed that it turned EBITDA profitable before ESOP costs during the quarter, three quarters ahead of its estimates.
• Alibaba-backed Ant Group’s senior vice president Douglas Feagin stepped down from the board of Paytm this week.

Due to the changes in the management of Paytm, the shares can once again touch INR 500 zone, said Ganesh Dongre, senior manager, technical research at Anand Rathi, After that, it can bounce and move upward to about INR 600-INR 620, he added. 

The positive results can also lead to a rally in the stock. 

Nazara The Biggest Loser

Shares of gaming startup Nazara Technologies fell 7.5% this week. Falling in three straight sessions, Nazara ended Friday’s trading at INR 548.4, down 3.2% compared to Thursday’s close.

Despite reporting a 31% YoY rise in its consolidated net profit to INR 22.4 Cr and a 70% rise in operating revenue, lower margins in Kiddopia, Wildworks and Nodwin adversely impacted Nazara’s shares.

Besides, it must be noted that India is tightening its regulatory framework around online gaming and still a lot of uncertainty remains for the gaming companies. The government is yet to decide on the GST rate in the gaming space. However, the Budget brought slight relief to the sector as the government provided some clarity on taxation for the sector, and removed the TDS threshold of INR 10,000 for online gaming startups.

However, Sitharaman said that the threshold limit for TDS will continue for lottery, crossword puzzles, games, and others, which will apply to aggregate winnings during a fiscal year.

“Nazara continues to show a falling pattern and we will wait for the INR 520-INR 530 zone to come before buying the counter,” said Dongre, adding that its major bottom is at INR 500.

Nykaa The Biggest Gainer

Shares of beauty ecommerce giant Nykaa made a sharp northbound movement this week, rising in all five sessions after witnessing a significant slump since the beginning of January.

Nykaa shares gained 12.4% this week.

While there are no significant fundamental changes that could possibly drive this rise, it must be noted that the startup recently appointed P Ganesh as its new Chief Financial Officer (CFO). 

Recently, ICICI Securities also upgraded Nykaa to ‘add’ from ‘hold’, saying that the cyclical slowdown in beauty and personal care (BPC) and fashion businesses was somewhat priced in.

Meanwhile, Nykaa, along with Info Edge, is a top pick for JM Financial given its strong downside protection.

Nykaa is yet to announce the date for its Q3 FY23 results, but JM Financial in its quarterly preview note for the internet space said that Nykaa’s growth during the quarter will be led by the festive demand during the holiday season, penetration in new channels and newer initiatives (eB2B superstore). 

“While there has been a tougher macro environment, we expect Nykaa BPC to still do well due to the relative inelasticity of Nykaa shoppers. We anticipate Nykaa to deliver 29%/26% YoY growth in GMV/Revenue led by strong growth in fashion and new initiatives,” the brokerage said.

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