New-Age Tech Stocks | CarTrade Tech biggest weekly gainer, Zomato up 6%; D-Street experts pick Paytm for short-term

New-age tech stocks such as Zomato, Nykaa, Mamaearth, FirstCry, Paytm, Policybazaar, among others, have lately generated a buzzing interest among D-Street investors, especially after significant volatility following their respective initial public offerings (IPOs). Market analysts say a combination of attractive valuations and profitability, strategic growth, and favourable market conditions has led to a positive outlook for these companies.

According to a majority of D-Street experts, new-age tech companies offer stronger long-term potential for investors than short-term buying opportunities due to their fresh business models, which are tech-driven and disruptive in nature. The companies are better positioned to exploit modern innovations in artificial intelligence (AI) and digital-first engagement.

Also Read: Zomato, Nykaa, Paytm, CarTrade and more: Should you buy or sell new-age internet stocks? Experts weigh in with top picks

Deepinder Goyal-led food delivery giant Zomato is the biggest new-age gen stock by market value with a market capitalisation (mcap) of ₹2,29,737.94 crore. Zomato is followed by India's largest online insurance and lending platform, PB Fintech, which operates ‘Policybazaar’ and commands a cap of ₹78,659.06 crore.

What are new-age internet companies?

New-age tech companies focus on innovative and high-growth areas. They often leverage modern technologies like artificial intelligence, machine learning, the Internet of Things (IoT), and blockchain to create unique products and services. The companies are characterized by sudden growth, high market valuations, and significant potential for disrupting traditional industries.

Also Read: Zomato shares jump nearly 8% as JP Morgan lifts target price to ₹340, projects 40% upside

India's top new-age tech firms operate in digital mapping, fintech, online marketplaces, food delivery services, logistics, gaming, and cloud computing. These firms include Awfis, Ola Electric, Digit Insurance, Mamaearth, Zomato, Nykaa, Paytm, FirctCry, Zaggle, RateGain, MapMyIndia, and Delhivery. In the last week, shares of Awfis and Nykaa surged the most among all new-age internet stocks.re

New-age tech stocks: Weekly price trend

In the first week of September, analysts said that Zomato, Nykaa, Honasa Consumer Ltd, which owns Mamaearth, and CarTrade Tech, performed well, showcasing improved relative strength compared to the general market. PB Fintech, IndiaMART, Just Dial and Maymyindia stocks were also in the limelight this week with good delivery buying from large and retail investors.

Paytm has struggled at ₹571, despite a 71 per cent recovery from its 52-week low, still 47 per cent below its year high. FSN E-Commerce Ventures Ltd, which owns the beauty and personal care brand Nykaa, continued its uptrend, trading at ₹194, having gained 67 per cent over the past year and 27 per cent in 2024 YTD

‘’Zomato continued to showcase market leader traits. The likes of Nykaa and Paytm progressively trended higher as they attempted to swing into a more dynamic stage from the mere consolidation phase stage one of stock cycle analysis, which was a positive indication. In contrast, stocks like Ola Electric, Delhivery, and FirstCry trended lower, indicating continuation of profit booking,'' said Kushal Gandhi, Technical Analyst, StoxBox.

Also Read: Nykaa block deal: Public shareholder sells 1.43% stake in FSN E-Commerce Ventures for ₹851 crore

Last week, CarTrade Tech was the biggest weekly gainer, leading the new-age tech pack with a stellar rise of eight per cent, followed by Zomato which rose 6.4 per cent, and Honasa Consumer (Mamaearth) which gained 5.46 per cent. On the downside, Paytm and FirstCry dropped by 1.14 per cent and 1.42 per cent, respectively.

Notably, CarTrade Tech commands the smallest market cap at ₹4,331.7 crore when compared to the top 10 new-age stocks, including Nykaa, Zomato, Paytm, Honasa Consumer, PB Fintech, and others, yet the online automotive firm dominated D-Street as the biggest weekly gainer in the group last week.

In FY24, new-age tech stocks gave up to 258 per cent returns, with Zomato topping the charts after a 38 per cent market correction in FY23. ‘’New Age stocks have seen a lot of positive action following the success of Zomato, which has now become profitable and focused on adding value to its stakeholders,'' said Avinash Goraksakar, Director, Research at ProfitMart Securities Pvt Ltd.

Also Read: Nykaa vs Mamaearth: Which e-commerce stock should you pick for long term?

New-age tech stocks outlook

Last week, Zomato saw a slight dip and is currently trading at ₹263, after a 27 per cent rise in 2024 so far. Analysts believe the stock may face resistance near ₹280. Delhivery is trading around ₹436, up 11 per cent in 2024 YTD, though it could face resistance near ₹450.

According to Avinash Goraksakar of ProfitMart, the long-term outlook for new-stage stocks looks positive, but investors also need to consider the valuations of such companies properly. Some are EBIDTA positive but have net losses, while some are EBIDTA negative as of now.

Also Read: OLA Electric shares slide for 6th straight session, down 30% from recent highs

‘’Investor sentiment towards these stocks has improved as valuations are now more attractive, and new-age companies have shifted their focus towards cash flow and profitability rather than merely chasing revenue growth. Many of these companies reported strong earnings in the June quarter,'' said Santosh Meena, Head of Research at Swastika Investmart Ltd.

However, he warns investors “should be selective, as not all will be able to sustain consistent performance”. Volatility is likely due to uncertainties in global markets in the near term. Still, any correction driven by global factors could present good buying opportunities in some of these stocks.

Also Read: Multibagger alert: Awfis Space Solutions zooms 17% to hit all-time high, gains 120% from IPO price in over 2 months

‘’With these companies shifting focus toward profitability, we see significant long-term potential, particularly for companies like Nykaa and Zomato. Their business models, now more geared toward cash flow and earnings, present exciting growth opportunities for investors seeking solid returns on investment,'' said Narinder Wadhwa, Managing Director & CEO of SKI Capital.

According to Wadhwa, these stocks may experience some volatility in the near-term. ‘’However, for the long term, we find that companies like Zomato, Nykaa, and PolicyBazaar are well-positioned for growth, especially when considering a systematic investment approach to manage market fluctuations,'' he said.

‘’My top picks remain Zomato and Honasa Consumer, given their strong growth prospects and visibility of future profitability,'' said Santosh Meena of Swastika Investmart.

Zomato: CLSA sees Zomato as having the most potential, positioning it as the largest listed beneficiary of evolving market trends in the food delivery sector. CLSA has maintained an ‘Overweight’ rating on Zomato, with a price target of ₹353 per share.

‘’The introduction of Blinkit initially was not welcomed highly by the markets, but as volumes picked up, the investors realized the potential of scalability going ahead. Additionally, there are only two players in the food app delivery space, which makes the runway for growth stronger here going ahead,'' said Avinash Goraksakar of ProfitMart Securities.

Also Read: Honasa Consumer: Mamaearth stock climbed over 45% since its IPO last November; What lies ahead?

Nykaa: Kushal Gandhi, Technical Analystat StoxBox, believes Nykaa has the potential to emerge as a late bloomer. The stock has not only witnessed a strong breakout with volume confirmation as it progressed into the dynamic stage but has also seen improving EPS, relative price strength, and buyers’ demand. 

‘’We recommend buying Nykaa for the target price of 250 in the medium term with a protective stop at 195. For a shorter period, we reckon trading opportunities in Paytm and Zomato for the target price of 690 and 285 while maintaining stop loss at 569 and 246 as they offer a favourable risk to reward opportunities from their current prevailing price,'' said Gandhi.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.