From Paytm to Zomato to Nykaa: Should investors grab new-age stocks on steep falls?
Should you buy new-age stocks now. Some of these stocks have lost more than half of their value in the past one year. Vijay Chopra of Enoch Ventures finds Zomato better than Nykaa from the new-age space.
New-age companies have been the talk of the town -- at least in some sections -- on Dalal Street, with the listing of Zomato in July 2021, and the secondary market debuts of Paytm, Delhivery, MapMyIndia, Policybazaar and Nazara over the next one year. Not all these companies are profitable yet. In fact, many such stocks have lost more than 50 per cent of their value in the last one year.
Experts are divided on the new-age space from an investment perspective, with some even flagging their valuations.
Goldman Sachs has maintained a 'buy' call on Paytm with a Rs 20 increase in its target price to Rs 1,120 -- implying upside potential of 112.7 per cent from the digital payments company's closing price on Tuesday.
The stock of One97 -- the parent company of Paytm -- is yet to command a premium over the issue price of its mega IPO, which concluded with an overall subscription of 1.9 times the shares on offer, lesser than the majority of primary market offerings in the bumper year.
Morgan Stanley has retained an 'overweight' rating on Zomato but reduced its target price for the stock by Rs 10 to Rs 82.
The brokerage has also kept an 'overweight' on Delhivery, but brought down its target price for the logistics company's stock by Rs 50 to Rs 400.
Not many analysts are convinced about the prospects of new-age company stocks.
,"I normally wait for more than a year (after the listing to take a call of buying," AK Prabhakar, Head of Research at IDBI Capital Markets, told Zeebiz.com, asked about whether he prefers chasing newly-listed new-age companies.
Prabhakar suggests waiting for a few quarters of earnings before assessing the true worth of such companies.
ALSO READ: Zomato shares react on CTO resignation; should you buy or sell?
Let's take a look at the returns some of the new-age stocks have given over the past few months:
|Stock||Return (%)||CMP vs issue price (%)|
|One month||Six months||One year|
Anil Singhvi view
Zee Business Managing Editor Anil Singhvi said recently that investors owning stocks of new-age companies like Nykaa, Policy Bazaar and Zomato should hold on and "avoid selling them at just about any price", though he said that the worst appears to be behind in this space.
"If you have missed the opportunity to sell at a high, resist selling it at a low as two wrongs will not make things right," he said. (Read more on Anil Singhvi's view on new-age stocks)
Are there any relatively better spots within the new-age arena?
"These companies need to be more realistic... I am not convinced by their cash burning models... I do not understand how they decide valuations. Tech companies are known to get higher valuations but such levels are not justifiable (for new-age companies)," Vijay Chopra of Enoch Ventures told Zee Business.
Chopra finds Zomato better than Nykaa from the new-age space, on the pretext that the restaurant aggregator is burning less cash than the digital payments firm.
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