New Age Tech Stocks at 52-Week Lows. Here’s What Lies Ahead

Last week, new-age tech companies saw a sharp decline in their share prices.(File)

The continuous volatility in Indian stock markets has caused new-age technology stocks to tumble.

A bunch of these new-age technology firms have lost about Rs 2.5 trillion (approximately US$20 billion) in market value since going public.

Last week, new-age tech firms took another hit as the  stock market plummeted due to an increase in Covid-19 cases.

These companies witnessed a sharp decline in their share prices bringing them close to their yearly lows. 

Here are five stocks nearing their 52-week lows.

#1 CarTrade Tech

Leading the list is CarTrade Technologies.

CarTrade Tech is a multi-channel auto platform with a presence across vehicle types and value-added services.

Shares of the company hit their 52-week last week after the overall stock market also fell on a spike in Covid-19 infections.

The stock has continued its downward momentum since October 2022 as the company missed the revenue estimate for the September 2022 quarter.

For the quarter, the company’s revenue came in higher by 13.3% YoY at Rs 878.9 m. However, this was 3.7% lower than analysts’ expectation.

Due to the increase in revenue, the company’s net profit came in higher by 109.1% to Rs 34.4 m.  

This rise was on the back of the highest-ever traffic for the quarter of 37 m average monthly unique visitors.

For the coming quarter, the company is focused on delivering better value to customers, which would help the company to differentiate its product from its competitor.

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#2 Nykaa

Second on the list is Nykaa.

Shares of the company also hit their 52-week low tracking the market. The stock has been under relentless selling pressure ever since lock-in period expired for pre-IPO investors and the bonus issue was announced.

Several fund houses and investors have offloaded their stake in the company since 10 November 2022, dragging the stock.

The company is engaged in the business of delighting customers (mainly women) or pampering women. It’s an e-commerce platform dealing exclusively with beauty and personal care products.

For the September 2022 quarter, Nykaa reported a 39% YoY increase in revenue at Rs 12.3 bn, while net profit jumped 344% YoY to Rs 52 m.

This was on the back of increasing gross merchandise value and increasing demand for premium beauty, personal care, and wellness segment.

For the coming quarter, the company is focused on accelerating investments in new store rollouts as well as store upgradation.

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#3 CE Info Systems

Third on the list is CE Info-Systems.

Shares of the company have been trading low after it announced launching its Panoramic Street View and 3D metaverse maps services in India, which coincides with google map’s street view launch.

However, analysts believe this has triggered a race towards capturing the Indian market share. 

CE Info Systems, also known as MapmyIndia, operates as a data and technology products and platforms company. It offers digital maps, geospatial software, and location-based technology solutions.

The shares felt further heat after the company profit momentum slowed down despite a 34.6% YoY increase in its operating revenue to Rs 763.1 m.

The company for the September 2022 quarter reported a marginal decline in net profit to Rs 253.7 m from Rs 254 m in the same quarter a year ago.

For the financial year 2023, it is looking forward to building on to recently released Real View 360-degree and Metaverse 3D maps products, as well as a new range of developer APIs.

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#4 Tracxn Technologies

Fourth on the list is Tracxn Technologies.

The shares of the company hit a low as the overall stock market fell. The rise in Covid-19 cases has dragged most of the tech stocks down.

Tracxn is among the world’s top 5 private market data providers.

It offers services such as workflow software, Excel plug-ins, deal-flow tools, personalised dashboards, and portfolio trackers.

For the September 2022 quarter, it registered a revenue growth of 28% YoY to Rs 191.1 m. It reported a net profit of Rs 15.4 m as against a loss of Rs 48.3 m a year ago.

This was the first quarterly result published by the startup after its stock market debut.

For the coming quarter, it is focussing on quality assurance and addressing data and intelligence gaps.

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#5 Zomato

Last on the list is Zomato.

Shares of the company hit a new low last week on the back of increasing competition in the sector.

However, the stock has been under pressure since January 2022 due to concerns about profitability, acquisition, and the lock-in period expiry making it one of the biggest wealth destroyers of 2022.

The company offers a platform that connects customers, restaurant partners, and delivery partners to search and discover restaurants and order food delivery. It serves customers worldwide.

Zomato, for the September 2022, reported a 62.2% YoY increase in revenue to Rs 16.6 bn. The net loss for the September quarter narrowed to Rs 2.5 bn from Rs 4.3 bn a year ago on the back of growth across business verticals.

The company expects the adjusted operating loss to come down further and eventually get to break even in the next 2 – 4 quarters.

For the financial year 2023, the company is focusing on increasing its market share.

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To conclude

After a dismal 2022 that saw their stock prices crash, investors have remained wary of new-age tech companies. This is because these companies are not yet profitable.

 The longer it takes for such companies to break even, the higher the chances of competitors entering either in direct or indirect space. 

That is why not just retail investors but even marquee investors who had invested in these companies through an anchor book are also selling their shares post the expiry of the IPO lock-in period. 

But even after this correction, some stocks are still trading at higher valuations, making it a high-risk investment. 

Thus betting on beaten-down tech stocks is extremely risky. You may not make wealth as anticipated.

This makes it suitable for very high-risk investors who have long investment horizons.

However, to select the right stocks, you should consider the quantitative and qualitative analysis in conjunction with detailed research.

If you plan to invest in such stocks, assess the company’s fundamentals and allocate wisely to fundamentally strong stocks.  

Also, keep in mind the overall factors impacting the company and industry. 

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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