From Nykaa To Zomato: How India’s New Age Tech Stocks Performed This Week

It was not long ago when Nasdaq was the preferred choice for successful Indian companies to get listed. However, with 14 consumer internet companies listed in India, Indian stock exchanges – BSE and NSE – have made a strong case for a domestic listing.

The listed companies, as well as those planning to come out with IPOs, have bolstered the trust of domestic and global investors in the country’s booming startup ecosystem. However, getting listed is not the end, but just the beginning of another rollercoaster ride. No one knows it better than the listed Indian startups as the highly-volatile market has taught them that the ride will not always be smooth.

The ongoing Russia-Ukraine war, rising inflation and fears of an impending global recession have kept the listed tech companies and their investors on the edge. Adding to the worries is the mixed view the analysts have on some of these stocks.

The volatility in the global stock market has been reflecting in the Indian markets as well for the last few months. However, this week brought slight relief as key indices Sensex and Nifty witnessed an upward trend. 

On Friday (July 8), benchmark index NSE Nifty50 ended 0.54%, or 87.7 points, higher from Thursday’s closing at 16,220.60, while BSE Sensex also rose 322.6 points to close at 54,501.06. Overall, Nifty and Sensex gained 3% and 2.3% during the week ended July 8, respectively.

Let’s see how the major tech stocks from the Indian startup ecosystem performed on the Indian stock exchanges this week and some key trends observed:

India’s 11 listed tech stocks from the Indian startup ecosystem ended the week with a total market capitalisation of around $32.83 Bn.

Nykaa

After tanking for over a week, shares of beauty ecommerce platform Nykaa’s parent FSN E-Commerce rose on Thursday (July 7), a day after it announced its foray into the men’s underwear and athleisure segment. The stock rose as much as about 5% to INR 1469.9, its highest since June 27. After creating some buzz about its new fashion brand GLOOT, Nykaa once again lost its gains on Friday.

Nykaa shares closed 4.2% lower at INR 1392.4 on the BSE during the last trading session of the week.

Founded by Falguni Nayar in 2012, Nykaa made a stellar market debut in November 2021. On the NSE, its shares listed at INR 2,018, which was about an 80% premium over the issue price of INR 1,125. On the BSE, the shares listed at INR 2,001 apiece. After witnessing a significant drop in January and February, Nykaa shares had brighter days in March. Once again a downfall started in April-end. Currently, the shares are trading around 27% lower than its debut price on the BSE.

Delhivery

Logistics solution provider Delhivery saw its best week since getting listed in May this year. On Thursday (July 7), the shares of the startup reached a record high of INR 595.3. However, on Friday, it shed some of its gains, closing 0.2% lower at INR 594.25 on BSE.

Founded by Mohit Tandon, Sahil Barua, Bhavesh Manglani, Kapil Bharati and Suraj Saharan, Delhivery listed at INR 493 per share on the BSE, 1.2% higher than its issue price of INR 487. On the NSE, shares listed at INR 495.2, a premium of 1.7% over the issue price.

Within weeks of seeing a moderately good IPO (given other tech stocks were under pressure), Delhivery had one of its worst days so far in mid-June. Its shares tumbled below the listing price to INR 466.5. However, at the current levels, shares are up about 20% compared to their debut price.

Several brokerages initiated coverage on Delhivery shares this week. Global brokerage Goldman Sachs and Indian brokerage Edelweiss presented a mixed view on the shares of the logistics startup. 

Edelweiss started the coverage with a ‘buy’ rating and INR 650 target price. “Compared to other new-age players (Zomato, Nykaa), Delhivery offers a superior combination of a quicker breakeven and faster-growing cash flow,” it said.

On the other hand, Goldman Sachs initiated the coverage with a ‘neutral’ rating and a target price of INR 540.

Goldman Sachs’ cautious note is also in line with other brokerages including Morgan Stanley and ICICI Securities.

Earlier ICICI started with a ‘hold’ rating and a target price of INR 484 on Delhivery while Morgan Stanley also had an ‘equal-weight’ rating with INR 540 target price. “We expect slow volume growth in ecommerce and higher fuel inflation to impact near-term margins,” Morgan Stanley had said.

Zomato 

Shares of the foodtech startup lost over INR 12,000 Cr of investors’ wealth last week after the announcement of its acquisition of quick commerce startup Blinkit.

While on a week-on-week comparison, Zomato was down over 2% on Friday, the stock ended 0.7% higher from its Thursday close at INR 54.85 on the BSE.

The markets seem to be worried about Zomato’s acquisition of Blinkit. While a majority of the analysts are of the view that the acquisition would add value to Zomato in the long term, investors are clearly bearish about it in the near term. Adding another loss-making company to its portfolio is the major cause of concern

The Deepinder Goyal-led startup reported widening of its net loss to INR 1,222.5 Cr in FY22 from INR 816.4 Cr in FY21. On the other hand, its operating revenue more than doubled to INR 4,192.4 Cr in the last financial year.

Zomato listed on BSE and NSE in July last year. Its BSE listing was at INR 115 per share, an over 50% premium to its issue price. On the NSE, the shares made their debut at INR 116. At the time of IPO, the startup’s market capitalisation stood at INR 98,260.88 Cr. Currently, Zomato’s market cap stands at 43,187 Cr.