Paytm, Nykaa, PB Fintech among new-age tech stocks trading below IPO price, Zomato outlier
- Paytm share price has seen a massive downfall and is trading at all-low levels after the Reserve Bank of India (RBI) recently ordered Paytm Payments Bank to stop offering its key services after February 29, citing non-compliance and supervisory concerns.
Paytm, Zomato, Nykaa, Policybazaar, and EaseMyTrip were among the notable new-age tech stocks that attracted substantial attention from investors upon their stock market debuts in 2021.
However, the initial enthusiasm surrounding these stocks has waned, with the majority of them currently trading below their IPO prices. With the exception of Zomato, the other stocks have yet to stage a recovery, lingering below their respective issue prices.
This divergence from the anticipated market trajectory prompts a closer examination of the factors influencing the performance of these companies and the evolving dynamics within the contemporary tech stock landscape.
Here is a breakdown of the performance of these stocks from their IPO prices:
Paytm
Paytm share price has seen a massive downfall and is trading at all-low levels after the Reserve Bank of India (RBI) recently ordered Paytm Payments Bank to stop offering its key services after February 29, citing non-compliance and supervisory concerns.
Paytm shares have crashed nearly 85% from its IPO price of ₹2,150 in November 2021 and now hit a new low of ₹325.30.
The fresh blow on the stock price came after One 97 Communications, the parent company of digital payments and financial services firm Paytm, confirmed receiving notices from the Enforcement Directorate (ED).
Earlier, global brokerage firm Macquarie downgraded its rating on the stock to ‘Underperform’ and sharply cut the target price to ₹275 from ₹650 driven by a sharp reduction in revenues across various segments.
Post the recent regulatory changes and diktats, Paytm now faces a serious risk of exodus of customers which significantly jeopardises its monetisation as well as its business model, Macquarie said.
Fintech giant Paytm shares have plunged 48% in 2024, while the stock is down more than 64% in three months.
Zomato
Zomato share price has seen a decent rally and is inching close to its all-time high level on the back of improved financials and healthy business growth. The food delivery aggregator reported the third straight profitable quarter during the October-December 2023 period.
Zomato shares hit a 52-week high of ₹159.20 apiece on Thursday, having gained more than 109% from its IPO of ₹76 in July 2021. In the past three months, Zomato stock price rose over 30%, while it has surged more than 211% in one year. A strong growth momentum in the segments, positive margin, and a leading market position have supported the superior performance.
The company’s better Q3FY24 performance and growth was fueled by Blinkit, which rose 27% QoQ, while food delivery revenue grew 10% QoQ, driven by a higher take rate. This was partially driven by better ad monetization on the platform.
Its management has retained its long-term revenue growth guidance at 40%+ YoY but increased it to 50%+ YoY for the near term.
After turning positive at the margin level in Q3, Motilal Oswal Financial Services now estimates Zomato to deliver 4.5% and 10.0% EBITDA margin in FY25E and FY26E. It has a ‘Buy’ rating on the stock with a target of ₹170 per share.
Nykaa
Shares of FSN E-Commerce Ventures Ltd., the parent company of beauty and personal care brand Nykaa, are trading below their IPO price. Nykaa shares are trading around ₹150, which is lower than the adjusted IPO price of ₹187.25. The price is adjusted to factor in the 5:1 bonus issue it announced in November 2022.
Nykaa made a strong stock market debut in 2021, listing at a premium of over 82% at ₹2,054 per share on the NSE as compared to its IPO issue price of ₹1,125 apiece.
The beauty and fashion retailer reported a net profit of ₹16.2 crore in Q3FY24, a rise of 98% compared to ₹8.2 crore in the year-ago period, driven by strong demand during the festival and wedding seasons.
The company's revenue from operations rose 22% to ₹1,789 crore from ₹1,462 crore in the year-ago period.
While there have been murmurs of rising competition for Nykaa BPC, the company seems to have retained its market share, if not increased as well. Overall, the company reported 29% and 24%YoY GMV and NSV growth with EBITDA margin rising 18 bps. Consolidated GMV for Q3FY24 was at ₹3,620 crore.
“This becomes particularly impressive in light of the tough discretionary environment as evidenced by FMCG results. Growth on transacting customers as well as ordering frequency was a bit subdued with AOVs sustaining at high levels,” JM Financial said. It reiterated a ‘Buy’ call on the stock with a target price of ₹210 per share.
PB Fintech
The shares of PB Fintech, the parent company of Policy Bazaar and Paisa Bazaar, are still trading below their IPO price even after two years of listing.
The insurance and financial aggregator made a stock market debut on the exchanges on November 15, 2021, listing at a premium of 22.7% at ₹1,202 apiece as against the issue price of ₹980.
PB Fintech shares reached a record low of ₹356 apiece in November 2022. However, the stock recovered and hit a 52-week high of ₹1,050 apiece on February 1, 2024.
In the last three months, PB Fintech stock is up more than 22%, while it is up over 88% in one year. On Thursday, the stock was trading around ₹935 apiece on the BSE.
EaseMyTrip
EaseMyTrip shares have eroded a significant value since its listing in March 2021. The stock is trading more than 73% lower than its IPO price.
Easy Trip Planners Ltd, the parent company of online travel aggregator platform EaseMyTrip, made its debut in March 2021 at ₹212.25, 13.5% higher than the IPO issue price of ₹186-187 per share.
The stock hit a 52-week high of ₹54 on February 8, 2024, and a 52-week low of ₹37.01 on October 26, 2023. EaseMyTrip shares have gained over 17% in the past three months and more than 22% YTD.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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