Top 5 platform-based stocks to watch in 2024

India, with its burgeoning digital economy and a massive population of internet users, has become a fertile ground for the proliferation of these platforms.

From e-commerce and ride-hailing to fintech and online marketplaces, Indian platform companies have demonstrated remarkable growth and innovation.

As India continues its journey towards becoming a global digital powerhouse, the role of platform-based companies is set to become even more pivotal.

Let us explore five platform-based companies that are at the forefront of India's tech and e-commerce revolution.

#1 Zomato

Zomato is a leading platform-based company in India that has revolutionised the food and restaurant industry.

The company operates in four business segments: food delivery, dining out, Hyperpure, and Blinkit.

It operates as a digital marketplace connecting millions of users with a vast network of restaurants.

Zomato has made a name for itself as a food aggregator, delivering food to our doorstep.

In the food delivery business, the company has a footprint across 800+ cities anda network of 247,000 restaurant partners and 400,000 delivery partners.

Zomato charges its restaurant partners commissions based on previously agreed rates. Additionally, It also earns revenue from the advertisement of restaurant partners.

Further, Zomato's Blinkit acquisition has rapidly expanded as a quick-commerce platform, delivering groceries and essentials within minutes.

The company has added 149 net stores during the year and is aiming to add 475 more stores in FY25 to take the total store count to 1,000 stores.

Hyper Pure is Zomato's farm-to-fork supplies offering for restaurants in India.

Zomato sources fresh, hygienic, quality ingredients and supplies directly from farmers, mills, producers, and processors to supply to its restaurant partners. As of FY24 end, the company billed 75,000+ unique outlets.

In FY24, it launched India’s first large order fleet. This was to improve customer experience while handling large orders that may not be carried on a two-wheeler.

Zomato's success can be attributed to its strong brand recognition, extensive network, and focus on customer experience.

However, the company faces intense competition from rivals like Swiggy, which has created a duopoly in the Indian food delivery market.

#2 FSN E-Commerce Ventures Ltd (Nykaa)

Popularly known as "Nykaa" is a digitally native consumer technology platform, that delivers a content-led, lifestyle retail experience to consumers.

The company has a diverse portfolio of beauty, personal care, and fashion products, including owned brand products manufactured by it.

Nykaa is the largest speciality beauty and personal care platform in India in terms of the value of products sold and one of the fastest-growing fashion platforms in India.

The company has the highest average order value (AOV) among leading online beauty and personal care platforms in India.

Nykaa offers 296,122 SKUs from 3,118 global and domestic brands primarily across make-up, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories.

It has 1,900+ brands with 120,000+ products as of January 2024.

It also has 23 warehouses across 11 Indian cities.

In addition to its current standing, Nykaa's deliberate foray into the women's and men's innerwear markets with Nykd and GLOOT signifies its goal to leave a lasting impression in the personal care industry.

The company derives 90% of its revenues from the beauty and personal care segment and 10% revenues from apparel and accessories.

Going ahead, management has a focus on expanding into the GCC market (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) with significant growth opportunities.

Nykaa says that it is optimistic about the growth potential in the premium fashion market.

#3 TBO Tek

TBO Tek is a leading global travel distribution platform that connects travel suppliers with buyers.

As of 31 December 2023, the company had sold over 7,500 destinations in more than 100 countries and employed over 2,000 people.

The company operates as a B2B marketplace, facilitating transactions between airlines, hotels, car rentals, and other travel providers with travel agencies, tour operators, and online travel companies.

The company operates in multiple countries, offering a wide range of travel products and services.

TBO Tek is known for its user-friendly interface, robust technology, and a vast inventory of travel options, making it a preferred choice for travel professionals.

The platform supports thousands of travel agents globally, providing them with the tools and resources needed to manage bookings, customize itineraries, and offer personalised travel experiences to clients.

In addition to its core services, TBO Tek also offers value-added features such as travel insurance, visa assistance, and loyalty programs, further enhancing its platform’s appeal to travel agents.

The average booking accepted through TBO has skyrocketed from just 13,396 in FY21 to 41,218 in FY23.

TBO Tek, a pioneering company in the travel and hospitality sector, stands out with only one competitor, Rategain, a SaaS company in a similar field, giving it more space to grow.

The global travel and tourism market experienced an 18.2% growth in 2023, reaching US$ 1.9 trillion, with a projected CAGR of 8.2% through 2027, driven by emerging markets like China and India. This surge presents significant opportunities for TBO Tek.

#4 Indiamart Intermesh

IndiaMART InterMESH stands as a behemoth in India's online B2B landscape.

The company focuses on integrating small and medium businesses (SMEs) into the new paradigm with speed and ease.

As the nation's largest digital marketplace, it has played a pivotal role in connecting buyers and sellers across a vast array of products and services.

With a dominant 60% market share in the online B2B classified segment, IndiaMART has become synonymous with business-to-business trade in India.

Beyond its core marketplace platform, the company has expanded its offerings to include value-added services such as cloud telephony, CRM, and accounting solutions, positioning itself as a comprehensive business enablement platform.

It has a portfolio of 7.9 m supplier storefronts, 214,000 paying subscription suppliers, 108 m live product listings, 24 m unique business enquiries & a total traffic of 252 m repeated users.

No single industry accounts for more than 8% of total paying suppliers. Construction & building raw material is the largest category in the marketplace and covers 8%.

The company has a subscription-based revenue model and RFQ quota. The top 10% of subscribers generate 47% of the revenue with an average revenue per user (ARPU) of ₹261,000.

IndiaMART aims to further penetrate the untapped segments of the Indian market, especially in tier-II and tier-III cities.

#5 Paytm

Paytm, a leading financial technology giant in India, has transformed the landscape of digital payments and financial services in the country.

It has become India's leading payments app, empowering over 20 m merchants and businesses to accept payments digitally.

Founded in 2010 by Vijay Shekhar Sharma, Paytm started as a mobile recharge and bill payment platform but quickly expanded its offerings to become a comprehensive digital ecosystem.

This success is driven by the trust of more than 300 m Indians who use Paytm for a variety of transactions, from paying at stores to recharging mobile phones, sending money to friends and family, and booking movies and travel tickets.

The company also operates Paytm Mall, an e-commerce platform that competes with the likes of Amazon and Flipkart in the Indian market.

While Paytm once held a dominant position in the UPI market, its share has contracted in recent times due to increased competition and regulatory changes.

Paytm accounted for 1.1 bn customer-initiated transactions on the network. That put the company in third place between the Walmart-backed PhonePe (6.8 bn) and Google Pay (5.2 bn), whose share of the market continues to climb.

However, it still commands a substantial user base and remains a major player in the overall digital payments ecosystem.

Following setbacks from the shutdown of its payments banking unit earlier this year, Paytm is optimistic about improvements in key operating metrics, including gross merchandise value and the addition of merchant devices.

Looking ahead to FY25, Paytm aims to achieve at least one profitable quarter.

Conclusion

The rapid growth of e-commerce in India reflects a broader shift towards digital convenience, driven by consumer demand for ease, affordability, and time-saving solutions.

With the Indian e-commerce market projected to reach US$ 350 bn by 2030, the landscape for platform-based companies is set for continued expansion.

The government's 'Digital India' initiative plays a crucial role in this evolution, aligning technological advancement with national development goals.

As digital adoption deepens across various sectors, platform-based companies are poised to be at the forefront of India’s economic transformation, capitalising on the growing momentum for digital integration and innovation.

The increasing adoption of digital solutions across various sectors - coupled with favourable government policies - creates a robust foundation for these companies to innovate and grow.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions.

Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com