Stock market news, stocks in news: Zomato, Nykaa, and Paytm are among the few new-age stocks that made headlines, mostly for the right reasons, in 2023. These stocks have rewarded investors with attractive returns, especially Zomato and PB Fintech, which have gained over 114 per cent and 78 per cent, respectively.

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Among other notable names, individually, One 97 Communications, the parent company of Paytm, has gained over 18 per cent, FSN E-Commerce Ventures, the parent company of Nykaa, has gained over 12 per cent and Delhivery has risen over 13 per cent. 

What led to the good performance of new-age stocks?

According to the analysts tracking the space, the following reasons can be attributed to a good run in these stocks:

1. Good financials

Atul Parakh, CEO of Bigul, believes that many of the new-age companies have shown signs of profitability or narrowing losses in recent quarters, indicating improved financial performance.

Parakh stated that Zomato turned its first operating profit in the recent quarter, along with PB Fintech and Nykaa reporting improved financials.

2. Increase in exposure by multiple mutual funds

Gaurav Goel, Founder and Director of Fynocrat Technologies, believes new-age stocks have gained traction as many mutual funds have increased their exposure to these stocks.

3. Stable macro-environment

As per Narendra Solanki, Head Fundamental Research, Investment Services, Anand Rathi Shares, and Stock Brokers, a stable macro-environment has given a boost to new-age companies' businesses in the last quarters.

4. Market rally and investors' confidence

Fynocrat Technologies' Goel believes that the rally in Indian markets this year, with strong participation from mid-cap and small-cap stocks, has driven some stocks even though there has not been much improvement in their financials, which could be one reason for the surge in a few new-age stocks.

According to Bigul's Parakh, investor sentiment towards high-growth, high-risk stocks has improved in 2023 as inflation fears have eased and interest rates have stabilised.

5. Digital adaptation

The government's focus on digital payments and the growing adaptation of online shopping benefited companies like Zomato, Nykaa, and PB Fintech.

So what lies ahead for these stocks?

Analysts have a mixed outlook on new-age stocks. Anand Rathi's Solanki expects emerging companies to prioritise consistent growth, robust operating cash flows, and favourable margins.

According to him, intense competition from publicly traded and unlisted entities will push investors towards companies exhibiting high profitability.

Solanki believes that Delhivery and PB Fintech, having successfully curtailed their losses, are poised to persist on this trajectory, aiming for profitability in the upcoming quarters.

Expressing assorted views, Bigul's Parakh said that new-age companies' success will depend on how well they juggle positive and negative factors, such as maintaining financial discipline and achieving profitability; navigating competition effectively with strong differentiation and customer focus; adapting to changing regulations and leveraging technological advancements; and maintaining investor confidence through transparent communication and sustainable growth plans.

Fynocrat Technologies' Goel expects new-age stocks that have rallied due to the frenzy in markets to correct as the participants will closely observe the improvement in the financial performance and will decide the future course of many new-age stocks.

Which new-age company stock should be on your radar? 

Bigul recommends buying Zomato, PB Fintech, and Cartrade Tech for the long term on the back of rapid growth in fintech, online food delivery, and online auto platforms. Also, as per Bigul, the mentioned companies currently operate in markets with limited competition, which has provided them with first-mover advantages and significant market share.

Fynocrat Technologies has kept Zomato and Paytm on a watchlist and will keep monitoring them before deciding to enter these stocks for the long term.

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