Paytm, Zomato, Nykaa, PB Fintech rise amid market volatility. Here’s what analysts are saying

Shares of new age internet companies including Nykaa, PB Fintech, Zomato and Paytm buzzed in Wednesday’s trade amid high volatility in the broader market.

Shares of FSN E-Commerce Ventures, the parent company of Nykaa, rose more than 3 percent to Rs 155.35. Zomato gained 3 percent to Rs 56.15. PB Fintech, which runs PaisaBazaar and PolicyBazaar, added 2 percent to Rs 476.15, while Paytm’s parent One 97 Communications traded at Rs 583.95, up 2 percent.

Stocks such as CarTrade Tech, Easy Trip Planners, Nazara Technologies and Delhivery also traded higher in Wednesday’s trade.

With the earnings season underway, brokerages have come out with quarterly estimates for some of the new age companies, suggesting improved business momentum.

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Festivities in the December quarter brought some cheer for hedgers, but the mood remains relatively gloomy with an inflationary macroeconomic environment dampening demand, JM Financial said in its report.

New age internet companies were hit hard in the 12-15 months, plunging up to 75 percent from record highs and cumulatively wiping more than Rs 2 lakh crore of goodwill from investors’ kitty.

Paytm is likely to report a 46 percent year-on-year (YoY) increase in revenue at Rs 2,125.70 crore compared to Rs 1,456.10 crore in the year-ago quarter, ICICI Securities said in a report. This brokerage expects Ebitda loss for Paytm to fall to Rs 488.10 crore.

Global brokerage JP Morgan had maintained its “overweight” rating on Paytm with a target price of Rs 1,100, while Morgan Stanley remains “equal weight” on the stock with a target price of Rs 695.

JM Financial said that growth in the December quarter for Nykaa will be led by the festive demand, penetration into new channels and newer initiatives (eB2B superstores), and it believes that new initiatives such as eB2B present a significant opportunity for the company over the next 3 – the 5 years.

Both Paytm and Nykaa have been on the radar over corporate action. Paytm’s board approved a share buyback of Rs 850 crore at a fixed price of Rs 810 apiece. In November 2022, Nykaa’s shares traded ex-bonus in the ratio 5:1.

For Zomato, JM Financial expects just 1 percent QoQ growth in GOV for food delivery in the December quarter, as it factors in the negative impact of inflationary pressures on discretionary spending and the rise in dine-in consumption.

Blinkit’s GOV should at least see low-teens QoQ growth due to improvement in order flow to dark shops, it said.

Domestic brokerage Kotak Institutional Equities has cut its price target on the new-age stock to Rs 85 from Rs 100 earlier, but maintained its ‘buy’ rating on the stock.

PB Fintech is expected to deliver 44 percent growth in insurance premiums and 59 percent annual growth in loan payments, says JM Financial’s report. It also expects revenue for Paisabazaar to grow by 71 percent year-on-year and Policybazaar to grow by 59 percent due to base effect and continued increase in insurance and credit penetration.

Nuvama Wealth, formerly known as Edelweiss Wealth, has initiated coverage on PB Fintech with a “Buy” rating and a target price of Rs 550 as it sees online financial products as an exciting space.

CarTrade is set to deliver 9 percent YoY revenue growth in 3QFY23 led by ad revenue with an adjusted EBITDA margin of 23 percent, improving 145bps QoQ, due to most expenses being fixed in nature and incremental revenue coming at higher margins, said JM Finansiell.

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“We expect Nazara to report revenue growth of 76% YoY and 24% QoQ. We expect organic revenue growth of 44% YoY,” it said. “For Easy Trip, we expect a sequential growth of 18% QoQ in gross booking revenue in 3QFY23 driven by the strong demand pick-up in the travel industry and favorable seasonality.”

Prabhudas Lilladher has “Buy” rating on Nazara Technologies with a target price of Rs 1,012, while Jefferies has assigned a target price of Rs 700 on Delhivery.

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