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

The year 2022 will be remembered as a year of extraordinary upheaval for investors. Shares of Internet startups such as Paytm, Nykaa, Zomato, PB Fintech and Delhivery also corrected significantly amid intense selling pressure and global headwinds.

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

Read more: Paytm, Nykaa, Delhivery, Zomato share a bumpy ride! Here is the story so far

Wondering what happens next?

According to Divam Sharma, Founder, Green Portfolio, the first 6 quarters were a nightmare for these companies and their investors as they saw declines of 30-70% from their share price.

“Despite what has happened since their IPO, investors may use a different lens when analyzing these stocks given the truth that their share prices have corrected. The food delivery business is extremely competitive with players trying to race to the top. The market is consolidating now. with Amazon ending its food delivery business,” Sharma said.

“Loss-making and negative cash-flow-generating businesses will eventually decline from the markets, but if a company has a path to profitability and growth, it will eventually create wealth for long-term investors. In the case of Amazon, it took several years to become profitable, and those shareholders who were able to withstand the volatility and wait until it became profitable created overwhelming wealth,” Sharma noted.

He also believes that the news and associated events since these tech companies’ listings have been largely negative, which is reflected in the share price we see today. The exit of many of their senior staff, anchor investors such as Alibaba and Softbank, and the correction in technology stocks worldwide have devalued their share prices.

“In a nutshell, after this huge drop in these new companies post-IPO, it’s a blessing in disguise as we see comfort in valuations, large institutional investors getting positive at these levels, competitive consolidation, early signs of a path for that profitability for core businesses is visible, the US Nasdaq has reached the bottom, because now the selling pressure from anchor locks is out, worse around the departure of senior employees is taken into account, these companies have proven tracks with a strong balance sheet and are not focused on profitability, “he said.

“While the Indian markets are still developing on these new age companies, very high risk investors, who have long investment horizons, may 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% as per estimates. The balance sheets of these names, Paytm, and even PolicyBazaar are well strengthened, enabling them to focus on customer acquisition and beyond market share expansion if necessary Zomato has given guidance that it will achieve profitability in the next four quarters – this is encouraging for investors, Sreeram Ramdas, vice president of Green Portfolio, told Business Today.

“Most of the negative sentiment has been priced into these names – exit of first-time management, expiration of investor lock-in period, institutional exits and select regulatory frictions. With this, we find the valuation of these new companies extremely attractive for high-risk investors to enter. 2023 and 2024 will be the years where the ambition of profitability meets reality and share prices will react accordingly, Ramdas added.

AR Ramachandran of Tips2trades shared the technical view, “While 2022 was a disastrous year for new technology IPO stocks, 2023 could see a rebound in these stocks that at least aim to show profitability.”

“Investors can buy Nykaa at a daily close above 150 for a target of 187-205 in 2023. Investors can buy Zomato at 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 those of the market experts. The facts and opinions expressed herein do not reflect the views of Business Today.