One97 Communications, the parent company of Paytm, posted a loss somewhat similar to last year. It recorded a net loss of Rs 1,631.50 crore in the nine months of FY22 against a net loss of Rs 1,696.10 crore in the previous year.

By Yoosef KP

The peloton of new-age tech companies continued to fall, even after the broader market rebounded from Thursday’s bloodbath. The inclusion of Paytm and Nykaa in the Nifty Next 50 index did little to change sentiment as they continued to perform poorly on Friday when the Nifty50 gained 2.5%.

To make matters worse, the nine-month losses through FY22 even exceeded their full-year losses in the prior fiscal year. While Zomato’s 9MFY22 net loss exceeded its FY21 loss of Rs 812.82 crore, Star Health Insurance’s net loss even widened to Rs 958.63 crore, against its FY21 loss of Rs 825.58 crore. Zomato’s net loss for the nine months of the current financial year amounted to Rs 849 crore, according to data from Capitaline.

One97 Communications, the parent company of Paytm, posted a loss somewhat similar to last year. It recorded a net loss of Rs 1,631.50 crore in the nine months of FY22 against a net loss of Rs 1,696.10 crore in the previous year.

Market experts believe that the worst is not yet over for these companies, with profitability long remaining elusive. Even after sharp corrections, the valuation multiples of several of them are higher than those of their larger US counterparts. “I think the worst is not over for these new era tech companies,” said Raamdeo Agrawal, president of Motilal Oswal Financial Services. Businesses are fully digital but the business model is weak and making losses, Agrawal added.

The valuation premium that many of them had at the time of listing was very large despite the fact that they were making losses. While Paytm and Zomato had a market cap of over Rs 1 lakh core at the time of listing, Star Health Insurance’s market valuation stood at Rs 52,191.23 crore on day one.

Last week, Sebi launched a consultation paper, offering money-losing new-era tech companies to make additional pricing disclosures in their offering documents. “Nobody knows how long it will take for these companies to recover, but it surely won’t be any sooner,” said Amit Khurana, head of equities at Dolat Capital.

The three technology stocks that will be part of the Nifty Next 50 index from March 31, 2022 are Zomato, FSN E-Commerce and Paytm. While Nykaa’s stock fell 0.75% in Friday trading, Zomato and Paytm gained 0.50% and 1.5% respectively. The BSE IPO index, which has tracked newly listed companies for two years, fell 20.8%, compared with a 4.1% drop in the Sensex over the same period.

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