A clutch of new age technology companies has lost nearly Rs 2.5 trillion or roughly $20 billion in market capitalization since they listed on the exchanges. Shareholders have been disappointed by either poor performance or unwieldy acquisitions. In some instances, the sale of stakes by investors post the expiry of the lock-in period, has dragged down the stock.
Although PayTm reported smaller losses, sequentially in the September quarter of Rs 571 crore and revenues grew 14% to Rs 1,914, the arrival of new competition has also prompted analysts to become more cautious. For example, analysts at Macquarie believe that Jio Financial Services “can pose a significant growth and market-share risk” for players such as Paytm and Bajaj Finance. PayTm has launched a buyback of shares at Rs 810 apiece, about 60% lower than its IPO price, but that has not enthused shareholders.
The stock is trading at Rs 476.40, less than a fourth of its IPO price of Rs 2,150.
In mid-October a cautionary outlook from Delhivery sent the stock crashing. The company had said that while the festive season sale surge in shipment volumes will spill over to the third quarter as well, it anticipated moderate growth in shipment volumes through the rest of the financial year. Delivery’s losses narrowed sequentially to Rs 254 crore in Q2Fy23 but revenues grew a marginal 3% to Rs 1,796 crore. Analysts at ICICI Securities have trimmed their revenue growth estimates “meaningfully” by 16% for the current year and by 23% for FY24.
Nykaa’s performance in Q2Fy23 was a shade below expectations since the net profits came in at just Rs 5.5 crore, the fallout of inflationary pressures. Analysts at Jefferies pointed out that despite the fashion business being at an early stage, a low single digit q-o-q growth is a disappointment. “It reflects management focus on measured growth rather than adopting an aggressive stance of chasing growth at any cost,” they observed.
Several investors sold their holdings post the expiry of the lock-in period a factor that weighed on the stock. The company attempted to reward investors with a bonus issue. However, the move attracted criticism since the record date of November 11 coincided with the date of the expiry of the lock-in of November 10.
In the case of Zomato, the Street is anxious the Blinkit acquisition will pull down the company’s performance. Analysts at Jefferies wrote recently that scepticism on quick commerce was high “given no proof of concept yet in any large market in the world,”. While many of the key metrics registered improvements, the food delivery player reported a larger net loss of Rs 301.6 crore for the September quarter than the #Rs 262.5 crore in the June quarter. Worryingly, the company laid off 3% of its workforce.
Investors have also been miffed with Cartrade Tech which posted losses in the September and December quarters of 2021 and in the March , 2022 quarter. Although the company reported profits in the June and September quarters, the stock is trading at around Rs 446, or half the levels of its 52-week high of 912.75.analysts at Kotak Institutional Equities trimmed their earnings estimates for FY23 –FY25 and maintained their ‘reduce” recommendation.