Zomato, Paytm, Latent View and CarTrade are among the recently-listed new-age businesses to have reported their Q3 results. Here's how the Street is reading their numbers.
Newly-listed new-age companies have begun 2022 with a mixed bag of earnings. Investors have punished several startup stocks in the recent past, from the likes of Paytm, PB Fintech and CarTrade. But why? The stocks appear to be mirroring the trend on the Nasdaq where investors have lost appetite for tech companies.
New age businesses such as Paytm and Zomato are yet to make profits but commanding sky-high valuations. Investors are staring at rising interest rates ahead.
"The sharp correction in US technology stocks, especially in Meta (Facebook), has come as a rude shock to investors who were hoping to create quick wealth in any and every tech-related business. The sharp correction in Chinese technology majors has also made investors jittery," Tanushree Banerjee, Co-Head of Research at Equitymaster, told CNBCTV18.com.
Paytm parent One97 Communications reported a more than 45 percent increase in net loss for the October-December period despite 89 percent revenue growth.
Latent View Analytics posted a more than double net profit for the quarter on year. Its revenue increased 37.7 percent on a year-on-year basis.
|Company||Profit/loss||YoY change (%)||Revenue||YoY change (%)|
|Latent View||Profit 49.9||122.8||107.7||37.7|
|CarTrade||Loss 23.4||NA (profit 18.2)||88.8||14.7|
|PB Fintech||Loss 298||1,421.5||367.3||73.2|
|FINO Payments||Profit 14.1||116.3||275.2||20.3|
|RateGain||Profit 0.09||NA (loss 11.1)||99||57.4|
|*Figures in crore rupees|
Here's how the Street is reading new age businesses now:
Paytm and CarTrade are among the stocks currently quoting at a discount to the issue price.
|Stock||Issue price||LTP||LTP vs issue price (%)||Listing|
|Latent View||197||488.6||148||Nov 23|
|PB Fintech||980||783||-20.1||Nov 15|
|RateGain Travel||425||351||-17.4||Dec 17|
|FINO Payments||577||330||-42.8||Nov 12|
Veteran fund manager Samir Arora told CNBC-TV18 he believes this year is going to be tough for making money, though India may outperform in the near term. He finds it better to look at traditional, safer companies for investing now than new-age businesses. "Our top three holdings are ICICI Bank, SBI and HDFC Bank," said Arora, Founder and Fund Manager at Helios Capital.
In January, independent market expert Shankar Sharma said in an interaction with CNBC-TV18 that he sees room for more downside in new-age company stocks. One should not be surprised if they fall 80-90 percent by the end of 2022, he warned.
Macquarie has an 'underperform' rating on Paytm. The company's ESOP costs are a recurring expense going forward and were not factored in, according to the brokerage.
It raised its FY23-FY25 loss estimates for Paytm by 64-101 percent largely on higher ESOP costs and lowered its target price to Rs 700. The brokerage finds Paytm, trading at 11 times its FY23E sales, to be expensive.
But all is not gloomy in the new age universe.
Latent View shares have multiplied investors' money by 2.5 times compared with the issue price. Nykaa and MapmyIndia shares have rewarded investors with returns to the tune of 33-39 percent.
Zomato shares are nearly nine percent above the issue price, though having hit the issue price in intraday trade (February 15).
"It would be wrong to paint every tech company in India, whether old or new age, with the same brush. Investors need to be cautious in selecting the right kind of tech businesses that are sustainable. Plus, they need to be mindful of the stocks’ valuations while investing in them," said Equitymaster's Banerjee.
(Edited by : Akanksha Upadhyay)
First Published: IST