Nineteen out of the 29 new-age tech stocks under Inc42’s coverage declined in a range of 0.11% to a little over 39%
On the back of weak financials and allegations from AICPDF, shares of Honasa Consumer plummeted 39.34% to end the week at INR 224.30
Paytm emerged as the biggest gainer with its shares ending the week 17.04% higher at INR 900
The downward streak of the Indian equities market ended this week, with the benchmark indices ending in the green in a volatile week. However, investors largely remained bearish on new-age tech stocks this week.
Nineteen out of the 29 new-age tech stocks under Inc42’s coverage declined in a range of 0.11% to a little over 39%.
Shares of Honasa Consumer, the parent of Mamaearth, plummeted 39.34% after the company reported a loss and a decline in operating revenue in the second quarter of the ongoing fiscal year (Q2 FY25). The All India Consumer Products Distributors Federation’s (AICPDF’s) allegations on the company about it offloading excessive stocks to distributors further put pressure on the stock.
Recently listed foodtech major Swiggy also ended the week in the red. Its shares fell 3.16% to end the week at INR 416.25.
Its archrival Zomato also ended the week in the red, going down 2.02% to end the week at INR 264.15. However, the BSE on Friday (November 22) announced the addition of the Deepinder Goyal-led company to its benchmark index, BSE Sensex. This came a week after the NSE said that it would add the company’s shares to the futures and options (F&O) segment.
Last week’s top gainer Menhood, Ola Electric, Go Digit, Awfis, RateGain were among the other losers this week.
Meanwhile, shares of 10 new-age tech companies gained in a range of 0.68% to a little over 17% this week. Continuing its bull run, Paytm emerged as the biggest gainer this week. The fintech company’s shares ended the week 17.04% higher.
Other gainers this week included Zaggle, Yudiz, CarTrade, EaseMyTrip, FirstCry, Delhivery, DroneAcharya, Nazara Technologies and PB Fintech.
Amid all these, logistics major BlackBuck made a lukewarm public market debut on November 22. Shares of BlackBuck’s parent Zinka Logistics got listed on the BSE at INR 279.05, a premium of 2.21% over its IPO price of INR 273. The stock ended the first trading session down 6.76% at INR 260.20.
Brokerages were divided on BlackBuck’s IPO. KR Choksey gave the IPO an “Avoid” rating, stating that it has remained loss making even at the EBITDA level over the past three years, unlike its peers.
On the other hand, Hem Securities gave a “Subscribe” rating to the IPO with a long-term perspective, citing BlackBuck’s strong unit economics and promoter-led management team.
Meanwhile, in the broader market, Sensex ended the week 1.98% higher at 79,117.11 and Nifty 50 gained 1.59% to close at 23,907.25.
The markets were closed on Wednesday (November 20) on account of elections in Maharashtra.
Commenting on the broader market movement this week, Vinod Nair, head of research at Geojit Financial Services, said that investors looked to capitalise on attractive valuations of stocks after the recent correction.
It is pertinent to note that this week also saw prosecutors in the US indicting Adani Group’s chairman Gautam Adani, his nephew Sagar Adani, among others, in an alleged bribery case in India for obtaining solar power plant contracts. Following this, the shares of the Group’s listed entities plummeted on November 21.
“Investors shrug off Adani fears and expect state election results to bring more stability to the market. Many of the blue chips are available at below-average valuations, while meaningful corrections in mid and small cap indices provide opportunity for broad-based momentum,” Nair added.
The counting of votes for the assembly elections in Jharkhand and Maharashtra and various bypolls across the country took place on Saturday (November 23). While the Bharatiya Janata Party (BJP)-led Mahayuti alliance secured a landslide victory in Maharashtra, Jharkhand Mukti Morcha (JMM)-led INDIA got a comfortable majority in Jharkhand.
Now, let’s take a deeper look at the performance of the new-age tech stocks this week.
After the addition of BlackBuck, the total market capitalisation of the 30 new-age tech stocks under Inc42’s coverage stood at $86.47 Bn at the end of the week. Minus BlackBuck’s $540 Mn market cap, the market cap of 29 new-age tech companies stood at $85.93 Bn as against $85.6 Bn at the end of the previous week.
Honasa Shares Tank On Distribution Woes
Witnessing one of the biggest weekly falls for a new-age tech stock in recent history, shares of Mamaearth parent Honasa Consumer ended the week 39.34% lower at INR 224.30. With this, its market cap also plunged below the unicorn mark and stood at $862.9 Mn at the end of the week.
The beauty and personal care (BPC) major disclosed its Q2 FY25 after market hours on November 14. It slipped into the red during the quarter and posted a consolidated net loss of INR 18.6 Cr as against a profit of INR 29.4 Cr in Q2 FY24. Revenue from operations also declined nearly 7% to INR 461.8 Cr from INR 496.1 Cr in the same quarter last year.
The company attributed the grim financials to its ongoing transition from a super-stockist-led distribution model to a direct distributor model as part of “Project Neev”.
The company’s shares slumped 20% in the first trading session this week. Amid this, the AICPDF accused Honasa of engaging in unethical stock dumping practices, claiming that distributors across the country are grappling with issues related to “unsold stocks nearing expiry” from Honasa.
Further, the body also said that the BPC major has unsettled credit notes amounting to approximately INR 50 Cr.
AICPDF’s national president Dhairyashil Patil warned that the federation would be compelled to consider a nationwide decision of non-cooperation if these issues remain unresolved.
While Honasa rubbished the allegations, investors turned extremely bearish on the stock. Its shares plunged to new 52-week lows in every trading session this week. The company’s shares touched a low of INR 222.15 on Friday.
Shares of Honasa ended Friday’s session 30.77% below its IPO price of INR 324 .
Paytm’s Bull Run Continues
After touching all-time lows after RBI’s action against Paytm Payments Bank earlier this year, shares of Vijay Shekhar Sharma-led Paytm have now rallied to near its 52-week high. Shares of the company ended the week at INR 900, up over 17% from the previous week. With this, its market cap also zoomed to $6.78 Bn.
On November 19, the company rolled out ‘UPI International’ for select overseas markets. Under this, Paytm users will be able to make UPI transactions from countries like the UAE, Singapore, France, Mauritius, Bhutan and Nepal.
Besides, the week also saw brokerage firm Bernstein double down on its “Buy” rating on the company’s shares. The brokerage raised Paytm’s price target to INR 1,000 per share from the previous target of INR 750.
The new target suggests an upside potential of more than 10% from the stock’s last closing price.
Ola Electric Touches A New Low
The electric two-wheeler maker continued to see a downward movement at the bourses this week, with its shares touching yet another all-time low. After touching a low of INR 66.60 on November 22, Ola Electric’s shares recovered slightly to end the week at INR 69.14.
The stock has been under selling pressure for quite some time now over concerns about its losses and complaints about after-sales service.
Amid these, Inc42 reported this week that Ola Electric has initiated a restructuring exercise to cut its workforce by approximately 500 employees. The exercise, aimed at enhancing operational efficiency and reducing redundancies in a bid to achieve profitability, will affect employees across departments and levels.
In Q2 FY25, Ola Electric reported a net loss of INR 495 Cr, which, although 5.5% lower year-on-year, marked a 43% increase from INR 347 Cr in Q1 FY25.
In a post-earnings call, Ola Electric founder and CEO Bhavish Aggarwal said that the company would look to keep its operating expenses flat or slightly lower in the coming quarters.