New-age consumer technology stocks continued to grab eyeballs among Dalal Street investors, even as pre-IPO investors continued to book profits in some of the names.
The latest shareholding data showed that mutual funds as well as foreign institutional investors increased stakes in five out of the six listed companies in the December quarter.
Further, in four of these companies, mutual funds have increased their holdings for the third consecutive quarter.
So far in the current financial year, all the new-age technology stocks have given positive returns, with some of them even clocking benchmark-beating returns and turning a multibagger.
Zomato is the best performing stock in the pack, as the stock has given a staggering 154% returns so far in FY24.
A strong improvement in the earnings trajectory was one of the primary reasons triggering higher investor interest in a majority of stocks.
For the second consecutive quarter in the three months ended September, Zomato reported a consolidated profit and a strong double-digit growth in the topline.
Meanwhile, companies like One97 Communications, PB Fintech, and Delhivery have considerably trimmed down their losses.
Let’s look at how the bullish bets by MF and FIIs aided the momentum in the new-age tech sector.
Zomato
An exit by China’s Ant Group notwithstanding, the cumulative holding of FIIs in the online food delivery aggregator increased to 54.88% in the December quarter from 54.72% a quarter ago. For the second straight quarter, FII holding has increased in the company.
Meanwhile, MFs increased their bets in the company for the third straight quarter, taking their cumulative holding to 12.34%. At the end of September quarter, MFs held 10.56% and at the end of March 2023, their holding was a little over 6%.
Paytm
This stock witnessed strong buying by both mutual funds and FIIs as their stake went up sharply in the December quarter. MFs raised their holding in the online payment solutions provider to 4.99% from 2.79% sequentially, and FIIs took their cumulative holding to 63.72% from 60.92%.
MFs have increased their stake for the second consecutive quarter. At the end of June 2023, they held a 2.5% stake in parent One97 Communications.
Post a strong December quarter earnings, most analysts have retained a positive stance on the stock.
“While key risks are slower ramp-up of lending business and intense competition, strong execution could trigger earnings upside and re-rating with 34% upside in 2024,” said Jefferies India, which has a “buy” rating on the stock with a price target of Rs 1,050.
PB Fintech
This was the third lucky stock to see an increase in the holdings of both MFs and FIIs in the last quarter. The cumulative holding of MFs jumped higher to 10.3% from 7.83% sequentially, and that of FIIs went up to 46% from 44%.
MFs have increased their stake in the company for the third consecutive quarter. At the end of March 2023, the domestic bulls were holding 7.34% stake in the online loan and insurance services provider.
The company is yet to announce its December quarter earnings but analysts expect it to report a strong year-on-year growth in premium.
Nykaa
This is the fourth stock where both mutual funds and FIIs increased their stakes in the last quarter. MF holding in the online personal and beauty care products retailer increased to 10.85% from 10.62%. Meanwhile, FII holding went up to 10.65% from 9.84%.
In fact, mutual funds have increased their holding in the company for the third consecutive quarter. At the end of March 2023, they were holding just 5.14% stake in parent FSN E-commerce.
Compared to the other stocks in the new-age tech pack, analysts are less bullish on FSN given the competitive landscape in the segments that the company caters to.
Brokerage Nomura Financial Advisory has retained a “neutral” rating on the stock as it believes that the current valuations are in the fair value zone. It has a price target of Rs 163 for the stock.
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
