The most recent shareholding patterns of companies like Nykaa, Delhivery, Paytm, and PB Fintech demonstrate that there is still enough supply, which has resulted in a continued overhang of some investors, despite the fact that these companies experienced high volatility as few early investors withdrew.
According to disclosures, brokerage BofA Securities notes that there is enough supply from companies like Softbank, Alibaba/Ant, Tencent, and others in the non-promoter stake that has not yet passed the line as a block.
"Ironically, better-performing stocks may see blocks as these investors would like to cash-in where demand is high. Nykaa now has the smallest non-promoter stake from pre-IPO investors at c. 11%," said brokerage BofA Securities in its report.
The brokerage firm anticipates that consumer technology firms like Zomato, Nykaa, Makemytrip, and even Delhivery will experience slightly slower growth over the next three to six months as a result of a slowdown in consumer spending and as these firms reduce discounts and other costs to concentrate on profitability.
In addition, it noted that PB Fintech and Paytm both have a greater likelihood of experiencing sustained sales momentum in the near future. In 2023, it also anticipates a divergence in the stock prices of Indian internet businesses that can demonstrate consistent revenue growth while keeping or increasing profitability.
Fundamental views of brokerage
The brokerage has recommended 'buy' rating on the stock and believes that the company has a sustainable competitive advantage in the cosmetics space with strong customer pull and being a preferred partner for most brands.
"We believe offline and eB2B expansion should help the company further improve its addressable market," said the brokerage in its report.
The brokerage has recommended 'buy' rating on the stock and foresees PolicyBazaar as the biggest beneficiary of rising online insurance penetration giving its dominant over 90% market share.
"With its new brokerage license, the company well placed to increase its addressable market and target the SMEs and improve conversion on back of physical dealer network. Overall, we see company delivery 35%+ revenue compound annual growth rate (CAGR) for next three years and improving its margins," said the brokerage.
The brokerage has recommended 'neutral' rating for the stock and expects the fintech company's s near-term momentum to remain good as it continues to show improvement in revenue mix towards high margin businesses like lending and soundbox.
The brokerage has recommended 'neutral' rating for the stock and believes that the online food app company is well placed in the 2-player food delivery market to gradually inch up share.
"Blinkit provide Zomato the ability to cross sell grocery/quick commerce services to the Zomato users. Balancing revenue growth with profitability would be key for stock re-rating. Medium term, the size of addressable market is key to drive growth," said the brokerage.
The brokerage has recommended 'buy' rating on the stock and expects the company to benefit from an uptick in travel, lower competition leading to improving margins and cashflows.
"Unlike the above names, the company doesn’t have any concerns on lock-up expiry. Any potential India listing which may leading to better price discovery may help re-rate the US listed stock," said the brokerage.