Paytm, Nykaa, Zomato, Delhivery, PB Fintech: Rs 2 lakh crore m-cap gone in 2022. What’s next?

The year 2022 will be remembered as one of extraordinary upheaval for investors. Shares of new-age internet companies like Paytm, Nykaa, Zomato, PB Fintech and Delhivery also corrected significantly amid intense selling pressure and global headwinds. 

Recently, the stocks were in the news after the lock-in period got expired for the pre-IPO investors. Notably, shares of Paytm, Nykaa, Zomato, PB Fintech and Delhivery have eroded a combined Rs 2 lakh crore in market capitalisation to Rs 1.71 lakh crore from Rs 3.76 lakh crore as on December 31, 2021.

Read more: Paytm, Nykaa, Delhivery, Zomato shares on a bumpy ride! Here’s the story so far

Wondering what’s next? 

According to Divam Sharma, Founder, Green Portfolio, the initial 6 quarters were a nightmare for these companies and their investors as they saw drawdowns ranging from 30-70% from their listing price. 

“Despite what has happened since their IPO investors can adopt a different lens in analyzing these stocks given the veracity at which their stock prices have corrected. The food delivery business is extremely competitive with players trying to race to the top. The market is now consolidating with Amazon wrapping up its food delivery business,” Sharma said.

“Loss-making and negative cash flow generating business will eventually diminish from the markets, but if a company has a path towards profitability and growth it will eventually create wealth for long-term investors. Once such case – Amazon, it took several years to turn profitable, and those shareholders who were able to weather the volatility and wait out until it turned profitable created stupendous wealth,” Sharma noted.

He also believes that the news and associated events since these tech companies’ listings have mostly been negative which reflects in the stock price we see today. The exit of many of their senior personnel, anchor investors like Alibaba and Softbank, and the correction in tech stocks across the globe have disparaged their share prices.

“In a nutshell, after this huge fall in these new-age companies post-listing, there is a blessing in disguise as we are seeing comforts on valuations, large institutional investors turning positive at these levels, competition consolidating, early signs of a path to profitability for core businesses being visible, US Nasdaq has bottomed, for now, selling pressure from anchor lock-ins is out, worse around senior employee exits is factored, these companies have proven track with a strong balance sheet and are not focussed on profitability,” he said. 

“Although Indian markets are still evolving on these new-age companies, very high-risk investors, having long investment horizons can consider investing or holding these new-age companies at these levels,” he added.

“Nykaa and Zomato are market leaders in their space with a market share of 29% and 55% according to estimates. The balance sheet of these names, Paytm, and even PolicyBazaar are well fortified which enables them to focus on customer acquisition and further market share expansion if needed. Zomato has given guidance that it would achieve profitability within the next four quarters – this is encouraging for its investors,” Sreeram Ramdas – Vice President at Green Portfolio told Business Today.

“Most of the negative sentiments have been priced into these names – exit of initial management, investor lock-in period expiry, institutional exits and select regulatory frictions. With this, we find the valuations of these new-age companies extremely attractive for high-risk investors to enter. 2023 and 2024 would be the years where the ambition towards profitability meets reality and the stock prices would react accordingly,” Ramdas added.

Sharing the technical view, A R Ramachandran from Tips2trades said, “Even though 2022 was a disastrous year for new age tech IPO stocks, 2023 could see a bounce back in these stocks which at least aim to show profitability.”

“Investors can buy Nykaa on a daily close above 150 for targets of 187-205 in 2023. Investors can buy Zomato on a Daily close above 62 for a target of 76-90 in the near term. Paytm needs a daily close above 566 to move higher up to 666-735 in the coming weeks,” he added.

Disclaimer: The opinions expressed in this article are that of the market experts. The facts and opinions expressed here do not reflect the views of Business Today.