On Thursday, Softbank sold 29 million shares of Paytm through a block deal. The shares of the fintech company tanked over 10 per cent to end at Rs 539.55. Similarly, Nykaa also cracked over 7 per cent on BSE.
Shares of Paytm and Nykaa are on a rollercoaster ride, especially after the lock-in period expired for their pre-IPO investors.
On Thursday, Softbank sold 29 million shares of Paytm through a block deal. The shares of the fintech company tanked over 10 per cent to end at Rs 539.55. Similarly, Nykaa also cracked over 7 per cent on BSE.
However, the stocks of the new-age internet companies managed to recover on Friday and were trading in the green. Shares of Nykaa even jumped over 6 per cent in Friday’s trade despite a block deal worth Rs 1,000.54 crore.
Earlier on Thursday, Mala Gopal Gaonkar sold 5.75 crore Nykaa shares at an average of Rs 175.48 per share while Canada Pension Plan Investment Board bought 1.7 crore Nykaa shares worth Rs 299.35 crore at Rs 175.25 apiece, data showed.
“With the winter approaching the PE space, there is a shift in private investors asking for profitability. This thought process is in sync with the listed markets. We are seeing deferment in most of the approved DRHP’s (IPOs) considering the macro environment challenges,” Divam Sharma, Founder at Green Portfolio told Business Today.
“We still believe that maintaining high growth and profitability to justify the valuations will be tough for these companies. Companies in the private markets are not used to quarterly reporting and when you get listed, you have to be subject to analysts on a more frequent basis,” Sharma said.
He further added that there are many companies in the private markets in various tech-based businesses which are profitable and are available for secondary at very lucrative valuations. There could be trading bounces, but investors should still stay away from these new-age companies trying to juggle between growth and profitability in the near term.
JPMorgan, in a note on Friday, said Paytm is the leading ‘fintech horizontal’ in India, having built more sources of monetisation across payments, commerce and financial services than all of its competitors.
While sharing a target of Rs 1,100, JP Morgan maintained its ‘Overweight’ rating on the stock after hosting Paytm President and Group CFO Madhur Deora at the JP Morgan Global TMT conference.
It highlighted that the scale-up of the lending business is running ahead of plan despite its focus on credit quality. Greater incoming demand for loans means Paytm has the leverage to be selective that benefits both Paytm as well as partner banks.
“After the one-year lock-in period for the company’s anchor investors expired, the market believes that the big-ticket sellers have left and the Nykaa is now trading at its lowest levels. This sentiment was fueled further by the purchase of new stakes by FIIs such as Norway’s Norges Bank on behalf of the Government Petroleum Fund and Aberdeen Standard Asia Focus,” said Ravi Singhal, CEO at GCL.
However, he added that the stock is still in base-building mode, and investors should wait for the stock to exit its base-building moves.
Vijay Shekhar Sharma-led One 97 Communications made a tepid debut on November 18 last year. The scrip got listed at a discount of 9.30 per cent at Rs 1,950 on the NSE against the issue price of Rs 2,150 per share.
Nykaa shares got listed at a premium of 79 per cent to the issue price, marking a strong listing for the online beauty retailer. The company made its market debut at Rs 2,001 per share on the BSE against the IPO issue price of Rs 1,125.
Reference Link:- https://www.businesstoday.in/markets/stocks/story/paytm-nykaa-shares-on-a-rollercoaster-ride-where-are-they-headed-353324-2022-11-18