New age companies including One97 Communications (Paytm), PB Fintech (Policy Bazaar), Zomato and FSN E-Commerce Venture (Nykaa) were once among the top retail darlings. These startup stocks, which were listed in late 2021 have taken a big hit in the last one year.
Shares of these internet-based companies have seen a sharp correction of up to 75 per cent from their record-high levels, thanks to their then-rich valuations. However, a number of brokerage firms have turned positive on these counters and suggested up to 90 per cent rise in these stocks. Here’s what various brokerage firms said about these counters:
| Paytm | Target Price: Rs 1061 | Upside Potential: 90% |
Citi said that the online major looks quite attractive at current levels and, more importantly, there are many growth drivers in the offing. Paytm’s Merchant Payment Volumes (GMV) for the quarter-to-date stood at Rs 2.34 lakh crore, up 41 percent YoY. Valuations are attractive and are pricing in most of the downside risks, it said.
“We rate One 97 Communications (Paytm) as a buy. We think Paytm has several existing and emerging levers to drive long-term platform stickiness and improve overall profitability (Financial Services) in the business,” Citi said in its report with a target price of Rs 1,061 for Paytm, suggesting an upside of 90 per cent compared to its market price of around Rs 561.
| Zomato | Target Price: Rs 82 | Upside Potential: 64% |
Zomato Gold price has been continuously hiked by Zomato and now sits at Rs 299 for three months, higher than the introductory price of Rs 149 but still lower than the comparable package price offered by Swiggy. At Rs 299, we reckon customer profitability is still below the average company-level profitability, which may eventually be offset by higher restaurant take rates and higher package renewal costs for Gold customers, said Kotak Institutional Equities.
Our DCF of the food delivery business bakes in FY2023-30 food delivery GMV CAGR of 19 per cent. Core business EBITDA can however increase at a much faster pace given the operating leverage potential in the business. Some level of experimentation in both Zomato and Blinkit businesses will continue, as Zomato attempts to increase its share of the customer wallet, Kotak said with a fair value target of Rs 82.
| Nykaa | Target Price: Rs 214 | Upside Potential: 60% |
Consumption in India is going through a slowdown. However, given the low penetration rate of beauty products and low ticket size, we think the impact will be quite low on Nykaa. Major capex on fulfillment centers has already been completed, and the company now has 37 fulfillment centers for the BPC segment, said Nomura.
“The annual gross market value (GMV) run-rate for 3QFY23 was more than 250 crore for Nykaa Cosmetics. Our DCF valuation factors in 18 per cent revenue CAGR for FY25-40F (34 per cent online BPC market share), with EBITDA margin stabilizing at 17.5 per cent. We maintain our Buy rating with a target price of Rs 214,” it said.
| PB Fintech | Target Price: Rs 750 | Upside Potential: 34% |
PB Fintech has been moving with a positive bias in a gradual trending mode upward. It also gave a good bounce from the bottom at around Rs 500 levels. A deceptive close above 600 levels would improve the bias and anticipate further upward movement, said Vaishali Parekh, Vice President – Technical Research at Prabhudas Lilladher
“With the RSI also on the rise, indicating a trend reversal, the bias has become even stronger and more positive. With good volume participation witnessed, we suggest buying and accumulating this stock for an upside target of Rs 750, keeping a stop loss of Rs 500,” she said.
However, Nuvama Institutional Equities downgraded the stock after its Q3 earnings to ‘hold’ with a target price of Rs 550 after its performance in December 2022 quarter, citing its limited upside potential.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
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