New Age Tech Stocks Post Mixed Week, Zaggle Biggest Gainer

New-age Indian technology stocks posted a mixed performance for the week despite a broader market rally that pushed benchmark indices to fresh all-time highs.

Fifteen of the 28 new tech stocks covered by Inc42’s analysis gained between 0.54% and just under 23% this week. Shares of fintech major Zaggle surged to a fresh all-time high of INR 446.40 crore this week. The stock emerged as the top gainer, rising 22.64% during the week. Recently listed SaaS startup Unicommerce, gaming major Nazara Technologies, Paytm, PB Fintech and FirstCry were among the other top gainers this week.

In addition to Zaggle, two startups saw their stocks rise this week, the parent company of Mamaearth Honas and the field of food technology Zomatohit new all-time highs. Zomato gained 4.94% this week and ended the week at INR 272.90 crore, but Honasa fell 7.20% and ended the week at INR 493.45 crore, ending as the biggest loser this week.

Apart from major player BPC, shares of 13 startups fell this week, ranging from 0.56% to over 7%. The biggest gainers last week were TAC Infosec, Nykaa, Awfis and Fino Payments Bank, which all ended the week in the red.

Meanwhile, benchmark indices Nifty 50 and Sensex hit their all-time highs on Thursday (September 12). While the Sensex gained 2.1% this week to end at 82,890.94, the Nifty 50 rose 2% to end at 25,356.50.

“Despite volatility, DII and FII flows remained positive as strong monsoon and expectation of pick-up in demand during the festive season weighed on investor sentiment… The market touched a new high as optimism over interest rate cuts across the globe (ECB and US Federal Reserve) provided positive impetus to global markets,” said Vinod Nair, Head of Research, Geojit Financial Services.

Nair believes that market trends in the coming week will be shaped by the US Federal Reserve meeting next week. An interest rate cut is expected to be announced during the meeting.

Amid the bull market, the IPO spring is underway in the Indian equity market. Pantomath Capital Advisors reported that IPO fundraising touched a 27-month high in August with 10 companies collectively raising INR 17,047 Cr.

Domestic companies are expected to raise over INR 1.50 lakh Cr through IPOs in the next 12 months, indicating sustained activity and strong investor interest.

Counting on this, Ather Energy has become the latest new-age technology startup to file its DRHP with SEBI for an IPO. According to the electric vehicle maker’s DRHP, filed on September 9, its proposed IPO will be a combination new issue of equity shares worth INR 3100 Cr and an offer for sale (OFS) of up to 2.2 Cr of ordinary shares.

Now let’s take a closer look at how new-age technology stocks performed this week.

The combined market capitalization of the 28 new technology stocks covered by Inc42’s analysis was about $82.93 billion at the end of this week, up from $79.38 billion at the end of the previous week.

Zaggle soars to new heights

Almost a year after its listing, shares of fintech SaaS startup Zaggle Prepaid Ocean Services are enjoying renewed investor interest. The startup’s shares are up 22.64% this week, ending the week at INR 437.20 Cr. Its market capitalization also crossed $630 Mn this week.

The startup’s stock has been rising in September on the back of a slew of new wins. Zaggle announced that it had secured deals this month from companies like Blue Star, FCM Travel Solutions, HDFC ERGO and Founderlink Technologies.

For the uninitiated, Zaggle offers businesses an employee expense management platform and an employee rewards platform, among other things.

In its annual report, Zaggle claims to be India’s leading prepaid card issuer. As of March 31, 2024, the company had distributed over 50 million cards and had over 2.73 million users. Additionally, the company added 620 new corporate customers in FY2024, including household names like Wipro, Bennett Coleman, and Emcure Pharmaceuticals.

Zaggle Net profit was INR 44 Cr in fiscal 2024 as compared to INR 23 Cr in the previous fiscal. Operating Revenue increased by 40% year-on-year to INR 775.6 Cr in fiscal 2024.

The startup is aiming to grow revenue by 45-55% in the current fiscal year. Zaggle Managing Director and CEO Avinash Ramesh Godkhindi said in his annual report that the growth is expected to be driven by the startup’s strategy of scaling its products – Zoyer and Save and Propel, as well as increasing cross-selling efforts.

“We are working diligently on our US expansion, precisely identifying our Ideal Customer Profile (ICP) and Product Market Fit (PMF) to ensure our intended success,” Godkhindi said.

Wholesale offers throw Honasa off balance

The rally seen in Honasa stock since its Q1 earnings announcement came to a halt this week. The stock fell 7.2% to end the week at INR 493.45 crore. However, the week started strongly, hitting a record high of INR 546.5 crore during intraday trading on September 10. This jump also led to its market capitalization crossing the $2 billion mark.

The rally comes after HSBC reaffirmed a ‘buy’ rating on Honas and raised the target price from INR 550 to INR 570.

The brokerage said Honasa is expected to achieve over 20% structural growth in the coming years, driven by continued margin improvements. It also said the startup’s house of brands strategy will increase its market share in various high-growth personal care sectors.

During this boom, many startup investors sold shares September 12. Peak XV Partners, Fireside Ventures, Stellaris Venture Partners and others collectively sold shares worth INR 1601.68 Cr through bulk deals. The shares were bought by Morgan Stanley and ICICI Prudential Life Insurance Company.

As a result of wholesale transactions, on September 12, the value of the startup’s shares fell by almost 6%.

Meanwhile, ICICI Prudential’s stake in Honasa rises to 5.48% after acquiring new shares.

Markets react positively to Nazara’s acquisition spree

Major player Nazara continued its expansion this week and investors responded positively. The stock ended the week 14.05% higher at INR 1050.40 crore. This took its market capitalization to over USD 950 million this week.

Here are the top startup stories this week:

• Nazara revealed her plans acquire 15.86% shares on the gaming community platform GetStan Technologies Pte. Ltd (STAN) for INR 18.4 Cr (approximately USD 2.2 Million). The purchase will be made through its wholly owned subsidiary Nazara Dubai FZ via a secondary transaction.
• The startup plans to make its biggest bet with a purchase 47.7% stake in online poker platform Pokerbaazi, parent company of Moonshine Technology for an amount of INR 831.5 Cr under secondary transaction.
• Nazara’s board is expected to decide on approving the raising of new funds through the issuance of ordinary shares on a preferential basis on September 18.

Nazara has expanded its expansion from FY24 with two new acquisitions. In the previous fiscal year, it acquired 100% of Paper Boat and NextWave. Its Sportskeeda subsidiary acquired Pro Football Network, SoapCentral and Deltia’s Gaming.

Its gaming subsidiary NODWIN has acquired Freaks4U Gaming, Branded Pte. Ltd, Comic Con India, PublishME and Ninja Gaming, enabling it to expand globally.

In its annual report, Nazara reiterated its focus on acquisitions to bolster its revenue. It said it would expand its portfolio of core gaming IPs and invest the cash generated to acquire new IPs and grow its satellite business.

Additionally, the company is focusing on esports and ad tech businesses and expects these businesses to expand into areas such as physical gaming, toys, and AR/VR/XR in the future.

“With significant cash reserves and a strong M&A portfolio, we are well-positioned to leverage further growth opportunities and enhance our trajectory through strategic M&A over the next few years, driving the future of gaming globally from our strong foundation in India,” said Nitish Mittersain, Managing Director and CEO, Nazara.