New Age Tech Stocks: Tech businesses that were recently listed, like Zomato, Paytm, and Nykaa, reported better-than-anticipated results for the June quarter (Q1FY23). In the first quarter (Q1) of the current fiscal year (FY23), Zomato, Paytm, and Nykaa all reported strong year-over-year (Y-o-Y) revenue growth due to increases in gross order value (GOV), strong monetization in payments, gross merchandise value (GMV), and distinctive new-age deep-tech digital products, respectively.
A successful stock market debut in November of last year helped omnichannel cosmetics retailer FSN Ecommerce Ventures, also known as Nykaa, increase revenue by 41% year over year to Rs 1,148.4 crore and gross merchandise value (GMV) by 47% YoY to Rs 2,156 crore. The consolidated GMV of Nykaa has increased at a 61% CAGR during the past three years. 11.2 percent of the overall GMV was made up of the GMV of owned brands.
Nykaa reported an excellent performance, with continuous growth (Q1FY23 GMV up 47% y-o-y/20% q-o-q) being the highlight against the backdrop of shaky consumer mood and a jump in physical retail, according to analysts at Edelweiss. While trends for flat unique visitors have changed in BPC over the past four quarters, they continue in Fashion, even though conversions are fueling order growth and AOV/private label share is still strong. Nykaa also disclosed that it has purchased Little Black Book.
“Overall, we continue to be positive about Nykaa. It is a lucrative new-age company owned by management that is unique globally and provides a multi-decade growth opportunity. Adding a greater WACC and rolling over to September 23E resulted in a DCF-based target price of Rs. 1,743 (Rs. 1,859); ‘BUY,’ they continued.
\Paytm recorded the highest Y-o-Y revenue growth at 88.5% as the figure increased to Rs 1,679.6 crore compared to the same period last year. This growth was driven by an increase in device subscriptions and quicker adoption of high-margin activities like lending.
According to analysts at Yes Securities, “Traction for the core Payments Services business was very broad-based with both the Consumer and Merchant sub-segments contributing Rs 5.19 bn and Rs 5.57 bn, respectively, rising 73% and 67% YoY. For the quarter, financial services revenue increased 4x YoY to Rs 2.71 billion.
The brokerage reported an improvement in net payments margin as follows: “(1) The company’s ability to negotiate better rates from banks was the primary factor in the improvement of Net Payments Margin. (2) Better transaction routing optimizations, particularly for wallet loading via UPI (3) Greater profitability in the online payments sector as a result of account optimization.”
Paytm was upgraded by brokerage firm Yes Securities from “Reduce” to “Neutral.” The firm updated its target price for the stock to Rs 850 per share in recognition of a better trend. Compared to Friday’s closing share price of Rs. 784, there has been an increase of 8%.
Zomato’s revenue increased 67% YoY to Rs 1,413.90, driven by an increase in revenue per order and a 10% sequential gain in GOV to Rs 6,430 crore in the April-June quarter. Strong growth in order volumes and modest growth in average order values emphasized, when compared to the prior quarter helped GOV maintain its pace.
“In our most recent note, we, management’s emphasis on the road to profitability. Results from the 1QFY23 period now indicate that we may have misjudged the urgency because adj. Ebitda loss was as low as Rs. 1.5 billion and food delivery broke even. It is encouraging to note that this is the case despite GOV experiencing double-digit QoQ growth, according to global brokerage Jefferies last week.
Kotak Institutional Equities has decreased its loss projections for FY2023–25 in light of Zomato’s results. The brokerage now values the stock at Rs. 80 instead of Rs. 79 as its fair value.