Shares of Paytm, Zomato, Nykaa dip. What should investors do?

Paytm share price:

At the time of writing, One 97 Communications aka Paytm traded at ₹646.10 apiece lower by 1.16% on BSE. Its market cap is nearly ₹41,954 crore. This fintech major has tumbled by at least over 2.5% on BSE with an intraday low of ₹637.15 apiece today.

Paytm has announced the closure of its buyback programme with effect from February 13, 2022. The buyback has nearly fully subscribed. In its regulatory filing, Paytm revealed, it bought back nearly 1.56 crore equity shares utilizing an aggregate amount of ₹849.39 crore — which would represent 99.98% of the maximum buyback size of ₹850 crore.

Zomato share price:

Currently, Zomato shares are trading at ₹50.35 apiece down by 2.80% on BSE. The stock has plunged by over 3.5% with an intraday low of ₹49.95 apiece. Its current market cap is around ₹43,101 crore.

Zomato has been in red for three consecutive days now. The plummeted by nearly 9% from February 10 to now.

In their shareholders’ letter, Zomato chief financial officer Akshant Goyal said, in January, they exited around 225 smaller cities which contributed 0.3% of the company’s GOV (gross order value) in Q3FY23 (October-December).

The reason behind the exit in these cities was due to “not very encouraging” performance in the past few quarters. Also, Zomato did not feel the payback period on their investments in these cities was acceptable.

Nykaa share price:

The leading online fashion retailer, FSN E-Commerce Ventures aka Nykaa shares took the most beating on Tuesday. It was trading at ₹143.15 apiece down by 4.34% on BSE. The market cap of the company dipped to a little over ₹40,760 crore. So far in the day, Nykaa shares have dived by nearly 5.5%.

This would be the second straight decline in Nykaa shares. In two trading sessions, Nykaa shares are down by over 8.5% on Dalal Street.

Nykaa shares faced heat after Q3 numbers. In December 2022 quarter, the company’s net profit contracted to ₹8.4 core as compared to ₹29 crore in the year-ago period. However, revenue rose to ₹1,462.8 crore in Q3FY23 versus ₹1,098.3 crore in Q3 of the previous fiscal.

What should investors do about new-age tech stocks?

Talking about the decline in new-age digital stocks, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services on Tuesday said, “new age digital stocks are not doing great primarily because the market is not doing great. India is underperforming this year with a negative 2.34 % return YTD while markets like China, Hong Kong, and South Korea are doing very well.”

On the other hand, S Ranganathan, Head of Research at LKP Securities believes pricey Valuations coupled with lack of earnings visibility continue to plague several New Age stocks across segments, and investors are not yet enthused with their quarterly earnings trajectory.

But new-age tech stocks are attractive to buy on dips as they have the potential for fruitful returns ahead.

According to Vijayakumar, when India’s underperformance changes, new-age digital companies also will start performing. Some results from this segment are very good like Paytm. Zomato also has done reasonably well, but Nykaa’s results came below expectations.

He added, “the long-term growth potential of these companies is huge and, therefore, in spite of the short-term challenges, these stocks have buyers, particularly after the sharp correction from their listing peak prices.”

Last week, Prabhudas Lilladher recommended ‘Buy’ on Paytm and Nykaa shares.

Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher on Nykaa said, “the stock has given a bullish candle pattern after a short consolidation period, and we anticipate it to give a return of around 15%–20% from here on. The RSI indicator has also given a buy signal by reversing its trend. The support is strong at around 130 levels. As a result, we recommend a buy in this stock with a stop loss of 132 and an upside target of 185.”

Meanwhile, on Paytm, Parekh added, “the stock has indicated a decent spurt to come out of the consolidation phase, and moving past the significant 200DMA level of 630 has improved the bias anticipating for a further rise in the coming days. The RSI has shown strength and with the chart indicating immense upside potential, we suggest to buy and accumulate the stock for an upside target of 845 keeping the stop loss of 608.”

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.