Indian new-age tech stocks witnessed a mixed week on the back of a sharp decline in the broader domestic market following HDFC Bank’s underwhelming Q3 FY24 results and weak global cues.
Of the 19 tech stocks under Inc42’s coverage, 10 slumped this week in a range of 0.3% to 9%. Nykaa emerged as the biggest loser this week.
Shares of IndiaMART fell this week after its weak Q3 earnings. Zomato, EaseMyTrip, Nazara Technologies, and ideaForge were among the other losers this week.
On the other hand, Paytm, which reported strong December quarter results, gained 13.3% this week on the BSE to emerge as the biggest winner.
Yudiz, DroneAcharya, PB Fintech and CarTrade Technologies were among the other gainers this week.
Overall, nine tech stocks gained during the week in a range of 0.3% and over 13% on the BSE.
Besides IndiaMART and Paytm, MapmyIndia also reported its Q3 earnings in the week. The geotech company also saw muted growth during the quarter.
Among the benchmark indices, Sensex declined 1.58% to 71,423.65 and Nifty50 fell 1.47% to 21,571.8 during the week. However, on the last trading day, Saturday (January 20), the market gained some momentum and ended the session in the green.
It must be noted that the stock market had an extended trading session this week, with Saturday being a working day. Next week will see markets opening only for three days. While Monday will be a market holiday on the occasion of the consecration ceremony of the Ram temple in Ayodhya, there would be no trading on the Republic Day on Friday.
Vinod Nair, head of research at Geojit Financial Services, attributed the subdued performance during this week to weak global cues and elevated domestic valuations in mid- and small caps, which eroded investor confidence.
“Strong US retail sales and rising US bond yields diminish expectations of a swift Fed rate cut, redirecting investor focus to safer bonds. In addition, discouraging Chinese economic data further contributed to the lacklustre sentiment,” said Nair.
Siddhartha Khemka, head of retail research at Motilal Oswal, expects stock-specific movements next week as more companies report their quarterly earnings.
Moreover, the interest rate decision of the Bank of Japan and the European Central Bank is due next week, along with the US GDP and PMI data, which would influence the global rate cut trajectory, Khemka added.
Now, let’s take a look at the performance of the new-age tech stocks this week.
Despite the overall volatility, the total market capitalisation of the 19 new-age tech stocks under Inc42’s coverage stood at $42.67 at the end of this week as against $42.34 Bn last week.
Paytm Trims Its Loss
Shares of Paytm surged over 13% this week, largely driven by its strong Q3 FY23 results. The stock ended the week at INR 784.2 on the BSE.
Despite the fintech major witnessing degrowth in its lending business on a quarter-on-quarter (QoQ) basis, which was expected after it scaled down the business partially in December, it managed to bring down its net loss during the quarter.
Here’s a quick glimpse at Paytm’s Q3:
Net loss narrowed over 43% year-on-year (YoY) to INR 222 Cr, while operating revenue surged 38% to INR 2,850 Cr
Revenue from payment services to merchants saw the biggest jump during the quarter
Loans amounting to INR 15,535 Cr were disbursed during the quarter, up 56% YoY but down over 4% QoQ
Besides, Paytm also announced incorporating new wholly owned subsidiaries in GIFT City and building an AI-driven cross-border remittance and payments technology system, which will deliver cost-effective solutions at a global scale.
Following the earnings announcement, brokerage CLSA upgraded Paytm stock to ‘buy’ and raised the price target (PT) to INR 960 from INR 925 earlier.
“There seems to be some focus on cost reduction; for the first time, employee expenses (Ex-ESOP) were flat QoQ. It seems to us that the company will try to offset the bulk of the BNPL business loss by doing a little bit in various things – new revenue streams, cost reduction, etc,” the brokerage said.
Jigar S Patel, senior manager of technical research analyst at Anand Rathi, said that traders can buy the stock in the range of INR 750-INR 780.
The target for the stock would be INR 900 with a stop loss at INR 699, he added.
Nazara Raises More Funding
Shares of Nazara Technologies saw an upward movement at the start of the week but began sliding down mid-week. However, the stock made a comeback and ended the last two trading sessions in the green, rising marginally.
Overall, the stock lost 2.49% during the week, ending the last trading session at INR 922.15 on the BSE.
It is pertinent to note that Nazara is aiming to close its planned fundraise of INR 750 Cr, which was announced earlier in 2023, with additional investment from Zerodha cofounders Nikhil and Nithin Kamath.
This week, the gaming major’s board approved raising INR 250 Cr via preferential issue. It would receive INR 100 Cr from the Kamath brothers’ NKSquared and Kamath Associates. Others including ICICI Prudential and Plutus Wealth will also invest in the company.
Following the announcement, Nazara also said that it would acquire a 10.77% stake in Kofluence Tech Private Limited from certain existing investors of the latter through a share swap deal. With this partnership, the companies are planning to launch an influencer-driven game discovery platform.
The following day, its shares dropped almost 3% on the BSE.
“Nazara has given a breakout on the weekly chart, so one can buy the stock in the range of INR 880-INR 920,” said Anand Rathi’s Patel.
He recommended stop loss for the stock at INR 850 and a target at INR 1,100 for the next one-and-a-half month.
MapmyIndia Reports Weak Q3
The geotech startup reported a profit after tax (PAT) of INR 31.1 Cr, which increased about 5% YoY in Q3 FY24. However, it declined 6% QoQ.
MapmyIndia’s operating revenue also saw a mere 1% YoY increase in the quarter, rising to INR 92 Cr.
The growth was partially hurt by its automotive and mobility tech business (A&M), which saw a decline on a QoQ basis.
However, MapmyIndia also announced bagging an order worth INR 400 Cr for providing map and connected services to Hyundai and Kia Motors OEM business in India for the next five years.
After declining sharply in three straight sessions from Tuesday (January 16), the stock regained most of the lost momentum in the last two trading sessions. Overall, the shares gained 1.17% during the week, ending at INR 2,044 on the BSE.
Shares of MapmyIndia have largely shown sideways movement over the last four-five months.
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