Profitability continues to be the buzzword among the listed and private new-age tech or internet companies. From achieving operating profitability, most of these companies are now proactively guiding towards PAT level profitability.
While the longer-term growth and margin expansion story holds, the brokerage sees limited upside in the near-term for some stocks that have shown strong exuberance recently.
However, it expects stocks to react more to leading indicators for Q3 considering the festive season and world cup combo would result in strong seasonality for companies such as Zomato, Nykaa, CarTrade Tech, Delhivery, EaseMyTrip and Affle (India).
IndiaMart InterMesh | Buy | TP: ₹3,300
JM Financial expects sequential paid subscription additions of only around 4,500 in Q2FY24 versus management guidance of 5,000 – 6,000, as a result of recent price hikes and high base of last year subscriber additions.
IndiaMart InterMesh is expected to deliver a strong revenue growth of 25% YoY in Q2FY24 driven by strong volume as well as ARPU increase. It expects EBITDA margin expansion of 60 bps YoY to 28.5% with EBITDA growth of 27% YoY and net profit growth of 18% YoY.
The brokerage has a ‘Buy’ rating on the stock with a target price of ₹3,300 per share, implying an upside of 16.4% from Wednesday’s closing price.
Also Read: Stocks to buy: DMart, Cera, La Opala among preferred retail stock picks for up to 33% upside
CarTrade Tech | Buy | TP: ₹850
CarTrade’s standalone business is expected to grow 9% sequentially and 26% on YoY basis considering the sustained strength in new auto sales. However, B2B Remarketing business is unlikely to recover yet with a dip of 7.5% in revenue on YoY basis, analysts said.
With the acquisition of OLX, CarTrade Tech is likely to experience synergies in both businesses in the long term.
JM Financial has a ‘Buy’ call on the stock with a TP of ₹850 per share, expecting an upside of nearly 35% from Wednesday’s close.
(Exciting news! Mint is now on WhatsApp Channels
Just Dial | Buy | TP: ₹830
The brokerage has a ‘Buy’ rating on Just Dial and a target of ₹830 per share.
According to the brokerage firm, recent price hikes by the company as well as the competition could lead to higher revenue contribution from B2B campaigns.
Further, it sees profitability trends to continue to recover (from the Covid lows) driven by improvement in productivity of the sales team, controlled A&P spend and scaling back of investments towards new initiatives.
Zomato | Buy | TP: ₹115
In the Food Delivery business, JM Financial forecasts sequential GOV growth of 4% (+15% YoY) amidst increased competitive intensity. It expects Zomato’s reported revenue growth would be relatively higher than GOV growth due to the recent improvement in take-rates.
At a consolidated level, it sees Zomato’s reported EBITDA loss narrowing down to ₹6 crore in Q2 versus a loss of ₹48 crore in Q1.
The brokerage firm has a ‘Buy’ rating on Zomato with a target price of ₹115 per share.
Also Read: India Portfolio: Bernstein gives 13 Bottom-up ideas for the rest of the year
Nykaa | Buy | TP: ₹210
JM Financial forecasts FSN E-Commerce Ventures, the parent company of Nykaa, to deliver GMV/Revenue/EBITDA CAGR of 27%/27%/63% over FY23-26E period. The company is expected to benefit from regional warehouses lowering fulfilment costs, optimisation of marketing costs and optimisation of category mix in Fashion.
The brokerage has given a ‘Buy’ rating to the stock with a target price of ₹210 per share, an upside of over 41%.
PB Fintech | Buy | TP: ₹980
The company is expected to show only marginal improvement at adjusted EBITDA level profitability this quarter while is expected to reach ₹100 crore in net profit in FY24. The brokerage forecasts PB Fintech to deliver insurance premium/loan disbursals/revenue CAGR of 30%/28%/30% over FY23-26E period.
It has a ‘Buy’ call with a target price of ₹980 per share, expecting an upside of 31%.
Route Mobile | Buy | TP: ₹1,900
Route Mobile is forecast to see 22% YoY (7% QoQ) revenue growth aided by increase in ILD/NLD pricing, expansion of partnership with Amazon in newer geographies and recent firewall deal wins (mainly Sri Lanka).
The brokerage has a ‘Buy’ call on the stock with a target price of ₹1,900 per share, an upside of 22%.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
“Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!” Click here!
