Shares of new-age internet companies are in focus after the lock-in period got expired for the pre-IPO investors. Ever since the lock-in expiry, investors have been diluting their stake in these counters.
On November 17, Softbank sold 29 million shares of Paytm through a block deal. Similarly, Lighthouse India Fund III sold three crore FSN E-Commerce Ventures (Nykaa) worth Rs 525.39 crore in a bulk deal, BSE data showed.
Also, according to some reports, Lighthouse is again likely to sell a stake worth Rs 320 crore in Nykaa, via a block deal.
The one-year lock-in period for Nykaa pre-IPO shareholders got expired on November 10, 2022, and the scrip also turned ex-bonus the same day.
Shares of Zomato also took a beating after the company's founder Mohit Gupta resigned from the company. It is said that the company is letting go of around 3 per cent of the workforce in the latest episode of layoffs. Various departments have been impacted by the layoffs.
The lock-in period of Delhivery also ended on Monday. CA Swift Investments dumped half of its holding in Delhivery at an average price of Rs 330.02 apiece, NSE bulk deal data suggested.
In another bulk deal, Morgan Stanley Asia (Singapore) bought 48,54,607 (48.52 lakh) Delhivery shares at an average price of Rs 330 apiece.
"When the tide turns, the appetite for high growth unprofitable companies falls and investments go back to safe value stocks. If you talk to the significant startup and PE voices, they talk about funding winter approaching and continuing in 2023, and that there is a shift in private investors asking for profitability. This thought process will sync with the sync the listed markets also," Divam Sharma, Founder at Green Portfolio told Business Today.
"We are seeing deferment in most of the approved DRHP’s (IPOs) of similar loss-making tech companies considering the macro environment challenges. Companies like Pharmeasy have dropped IPO plans, its shares in unlisted markets have fallen from 140 to 30 and still are not able to find any takers and have been finding it difficult to raise capital through rights issues," he said.
"Key PE and anchors dumping the stocks of Paytm, and Nykaa at such discounted levels are also a concern. We believe these stocks will follow trends from Nasdaq. We still believe that maintaining high growth and profitability to justify the valuations will be tough for these companies going forward. Also, on the regulator side, we are seeing regulations around influencers, data protection etc which will keep on impacting these businesses," Sharma said.
He further added that there are in fact many companies in the private markets in various tech-based businesses which are profitable and are available for secondary at very lucrative valuations.
"If you look at Paytm or Zomato, the companies have seen the exit of senior executives post them creating large value through the listing and many of them perusing entrepreneurial journey. There could be trading bounces, but investors should still stay away from these new age companies which are trying to juggle between growth and profitability in the near term," he said.
Notably, the shares of Paytm, Nykaa, Delhivery and Zomato have cracked over 50 per cent from their all-time high.
What do the technical charts suggest?
For Nykaa, the consecutive lower low formation in both weekly and daily time frames indicates that the trend in the stock has been methodically negative. However, amidst such negativity, prices are at extremely oversold conditions in the daily time frame hence a relief rally or a consolidation in prices can be seen before swaggering back to its negative momentum," Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking Ltd told Business Today.
The entire up move of the last few days is well channelled, with immediate resistance seen around 210-215 from the upper panel of the pattern which further coincides with the immediate swing high of Oct’22.
"The recent rally of more than 20% can be temporary in nature rally until and unless it surpasses the said resistance point. Daily MACD and 14-period RSI are also in negative terrain and its inability to surpass 250 would continue to maintain a negative bias and chances remain high of a downside rally towards 110-125," Das said.
"The longer-term trend for Zomato continues to remain weak with successive lower-low formations. Hence until and unless it trades above 77, the outlook is likely to remain negative. On the oscillator front, the stock is though trading above the 50-level mark (14-period RSI) with a 'buy' crossover," he noted.
However, the positive setup is likely to fade at the breach of the immediate support level of 59. Hence, it is advisable to sell on a rally until and unless the stock trades decisively above the previous swing high of 77, he said.
He said that the trend in the Paytm stock had been methodically weak with consecutive lower low formations. Prices recently have breached the previous swing low of 510 which further denotes a negative outlook in the near term.
"On the oscillator front, the stock is fast approaching oversold price territory (presently at 36). Hence, some amount of price consolidation can be seen at the current juncture before marching lower with its negative bias," he added.
Disclaimer: Recommendations given by the experts are their own. These do not represent the views of Business Today.
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