Zomato, Paytm, Nykaa, PB Fintech shares on bumpy ride! What should investors do?

Shares of Zomato Limited crashed 10 per cent and hit the lower circuit to touch an intraday low of Rs 90.45 on BSE on Thursday amid a brutal market sell-off. The stock has tanked over 46 per cent from its all-time high. The market cap of the firm fell to Rs 71,196.72 crore on BSE.
 
Likewise, the shares of all the new-age Internet companies have been under tremendous selling pressure, mirroring the global trend. Nykaa stock also tanked 5.45 per cent to hit an intraday low of Rs 1,571.30. The market cap of the firm slipped below Rs 80,000 crore.
 
Shares of Paytm have more than halved from its all-time high of Rs 1,961.05. The stock plunged 4 per cent to hit an intraday low of Rs 880 on BSE on Thursday. Similarly, the shares of PB Fintech Limited also slipped 5 per cent to Rs 737 against the previous close of Rs 776.20.
 
What should investors do?
 
Rajesh Agarwal, Head of Research, AUM Capital Market noted that some of the recent offerings defied valuation logic, especially the new-age companies that were mostly reporting losses.
 
Moreover, he said that despite hefty valuations they listed at heavy premiums which stretched valuation even further. Secondly, there was a scarcity of paper as very few names were listed but as more companies get listed the scarcity premium is bound to go. Thirdly, competition is high, new players are entering the game and that would again increase the woes as customer loyalty is zero.
 
“The companies have been reporting losses – although few have managed to bring down their losses over the years, it would still take some time before the bottom-line turns positive. A correction was waiting to happen,” he said.
 
He further added that with rate hikes in the coming days these loss-making new-age companies would face difficulties in raising fresh capital and that would hamper growth. Investors should be realistic and moderate their expectations, wait for reasonable valuations to enter, be very selective and have a long-term view.
 
“Overall market is in correction mode. The new-age Internet stocks like Zomato, Nykaa or Paytm are also facing massive selling pressure. This may continue for some more trading sessions. However, buying opportunities may arise on further correction of 2-3 per cent in these stocks. Investors may take fresh entry keeping a view of long term,” Dr. Ravi Singh-Vice President and Head of Research, ShareIndia told BusinessToday.in.
 
Kranthi Bathini, equity strategist at WealthMills Securities stated that the new age technology-led companies viz Zomato, Nykaaa were given handsome listing gains recently but due to the less visibility of profit growth in the near future, valuations look stretched for these stocks. Also, due to the correction on technology stocks on Nasdaq, the new-age technology stocks in India are facing selling pressure.
 
He added that the traders and investors with a high-risk appetite can venture into these stocks at this market juncture.
 
Dalal Street debut
 
Shares of Nykaa listed at a premium of 79 per cent to the issue price, marking a strong listing for the online beauty retailer. The company made its market debut at Rs 2,001 per share on the BSE against the IPO issue price of Rs 1,125.
 
Paytm initiated its journey as a public company with a 27 per cent fall over its IPO (initial public offering) price on November 18. The scrip listed at a discount of 9.30 per cent at Rs 1,950 on the NSE against the issue price of Rs 2,150 per share.
 
Shares of Policybazaar had made a decent debut on Dalal Street. The scrip had listed at a premium of 17.34 per cent at Rs 1,150 on the NSE against the issue price of Rs 980. The issue had got subscribed 16.58 times on the last day of the offer on November 3.
 
Zomato made a bumper debut on bourses with the unicorn hitting the Rs 1-lakh crore market capitalisation mark. The stock opened at Rs 116, 52.63 per cent higher on NSE against the issue price of Rs 76. The listing price on the Bombay Stock Exchange was at Rs 115, up 51.32 per cent.