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Any guesses which name is at the top of this list? Well, undoubtedly it’s Zomato.
Zomato was the best performing stock in this space, giving a staggering 258% return to investors in FY24. This was after a 38% correction witnessed in FY23.
Continued improvement in the company’s earnings performance and the browning quick commerce business bolstered prospects and drove the increased interest in the stock.
Noting the continued recovery in earnings, mutual funds (MFs) have increased their holdings steadily in the last five quarters. The domestic bulls held over 12% stake in the online food delivery aggregator as of December 2023, which is more than double of what they held a year back.
The other stock that did extremely well in FY24 is PB Fintech, as it has given 78% returns to investors after a downturn in FY23.
Similar to Zomato, this is another turnaround story in the new-age tech space. PB Fintech has seen continued improvement in its earnings by narrowing its losses and then reporting a profit in the December quarter.
This was another stock where MFs steadily increased holdings for three consecutive quarters. As of December end, MFs held 10.3% stake in the online financial services provider.
FSN E-Commerce, which owns the prominent beauty products brand Nykaa, also gave positive returns in FY24 after negative returns in FY23. In FY24, the stock rose 31% after a 56% correction in FY23.
Compared to the other new-age tech stocks, Nykaa has underperformed, given that the highly competitive landscape has restrained growth for the beauty and personal care products retailer.
Despite this, MFs have been bullish on the stock and increased their holding for three straight quarters.
CarTrade Tech is the fourth new-age tech stock to rebound sharply in FY24. The stock has given 63% returns this year after a 33% correction in FY23.
The stock that failed to be with its peers and enjoy the party was Paytm parent One97 Communications.
Until the last quarter, things were looking up and good, but a jolt from the Reserve Bank of India in February turned the tables against Paytm. The central bank barred Paytm Payments Bank from offering incremental banking services due to concerns regarding breach of and compliance with regulatory norms.
As a result, the stock was marred by Dalal Street bears, and plunged 37% in FY24. This was after giving 21% positive return in FY23.
How does FY25 look?
While new-age tech stocks have seen a sharp rebound, and the outlook is not as murkier as it was earlier, market experts aren’t going gung-ho on the entire pack.
“We believe that the new age tech stocks have still not come of age in the Indian stock markets. The next set of investors in these companies will be even more discriminating and ones who have a rigorous toolkit to analyze such companies,” Vikas Gupta, smallcase manager, CEO and chief investment strategist at OmniScience Capital, told ETMarkets.
Most of the companies are clearly driven towards a profit-oriented business model and are now trying to achieve profitability as well as positive cash flows.
“The important change for FY25 is this focus on becoming a positive cash flow business which doesn’t require continuous outside capital,” Gupta said.
Sharing a somewhat similar cautious tone, Palka Arora Chopra of Master Capital Services said that companies in this space are yet to reach a certain level of profitability despite a remarkable growth in revenue and user base.
“In the recent months, we have seen a decline in the outlook for the world market due to worries about inflation, growing interest rates, and a possible recession. As a result, investors are now more risk averse and prefer well-established companies,” Chopra said.
(Data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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