Rs 2 lakh crore fortune wiped out! How fintech cos turned riches to rags in 2022

Domestic stocks are certainly ending the year 2022 with a smile as they have managed to brush off the global woes and be an oasis in the desert.

But one part of the market that has been lagging are investors in new time and financial technology companies.

Over the past year, the sharp correction in stocks such as

FSN E-Commerce, , and Delhivery have impoverished investors by Rs 2 lakh crore.

So far this year, the shares in these companies have fallen by 39-60%.

The initial public offerings of these new companies saw a great investor frenzy even though many of them were expensive from a valuation point of view.

The challenges to revenue growth and profitability and the large sell-off in technology stocks globally made this package vulnerable to sales. Growing macroeconomic growth concerns against the backdrop of high inflation and steeper interest rate hikes led investors to abandon high-value stocks.

“Public market investors are paying more attention to cash flow and yield ratios. Some of the emerging technologies have adapted their business models to try to be profitable ahead of previous guidance. So those who can balance this growth and profitability equation will attract investors,” says Krishna Sanghvi, Chief Investment Officer, Mahindra Manulife Mutual Fund.

Given the lack of clarity about growth and return ratios, many money managers are apprehensive about entering this space.

“We are comfortable owning businesses where we can see a reasonable path to profitability and make sense from a capital efficiency point of view. This has led us to avoid investing in some of the new companies,” says Vinit Sambre, head of equities at DSP Mutual Fund .

While the analyst community is still largely skeptical about the development of the shares in 2023, not everyone is bearish on the long-term prospects of the companies.

“This bear market is excellent for consumer technology companies as the intensity of competition will decrease as there is no free money. It’s a winner take all game and I’m sure more big winners here in this decade,” said Amit Jeswani, founder and CIO of Stallion Asset.

Jeswani believes the worst, both in terms of share price correction and earnings challenges, is behind fintech and consumer technology firms.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)