New-age companies lose upto 68% market cap

Mumbai: Indian new-age companies that went public in 2021 have turned from being among the most-watched names to pariahs on Dalal Street. The recent sell-off in shares of Paytm’s parent One97 Communications, Zomato, FSN E-Commerce (Nykaa’s owner), PB Holdings, which runs Policybazaar, and Cartrade Tech has eroded investor wealth in these firms by ₹2.28 lakh crore. This is over half of their total market value on an average from their 52-week highs. In comparison, the total market cap of Sensex companies has fallen 8%.

On Monday, these five firms saw their total market cap fall by ₹7,700 crore led by the 13% decline in shares of One 97 Communications after the Reserve Bank of India (RBI) on Friday banned its payments bank from adding new customers due to alleged gaps in its technology systems. The stock is currently trading 68% below its IPO price of ₹2,150. While Paytm has seen its market cap drop ₹72,000 crore from the peak, the market capitalisation of Zomato and Nykaa have declined ₹64,000 crore and ₹53,000 crore, respectively, from their peaks.

Analysts advise reducing exposure to most new-age companies as the selling pressure could continue for a while.

“Reduce exposure to new-age stocks like Paytm, Zomato. The valuations they ask are huge and based on future business scope and not on present business,” said Manoj Dalmia, director, Proficient Equities. “One may keep a small portion allocated in these stocks and go for other established businesses in small- and mid-cap sectors with a strong business framework.”



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