India’s listed tech companies are feeling the heat from the stock market, after a major decline in stock prices globally has led to massive drop in valuation of Indian tech companies and a resultant losses in the worth of founder and promoter stakes in these companies
Under a huge sell-off pressure from institutional investors, tech stocks have been tumbling for the past 10 days. Zomato, Nykaa and Policybazaar have all lost steam since their encouraging listings, while Paytm has continued to go from bad to worse. As a result, founders and promoters have seen the worth of their holding erode.
Collectively, the founders and promoters of companies that went public in 2021 saw losses of over $1.74 Bn in their holdings due to the market crash.
Naturally, founders and CEOs will see gains in their holdings if and when the stock prices go up, but for now, the situation is bleak. Macro factors such as rising interest rates that have led to nervousness and heavy profit-booking, and this is not about to subside soon.
Falguni Nayar And Family Lose $1.1 Bn In Stock Market Crash
Nykaa, which had one of the most successful IPOs in India last year, saw its valuation soar to $13.5 Bn in the immediate aftermath of the listing. But it has also seen the most erosion in value due to the stock market crash.
Founder Falguni Nayar and family still own a 56.56% stake in the omnichannel beauty marketplace, which is currently worth INR 45,945 Cr ($6.1 Bn), but a week ago, the stake was worth over INR 54,500 Cr ($7.26 Bn).
Paytm’s Vijay Shekhar Sharma Loses $150 Mn
Paytm founder Vijay Shekhar Sharma owns 8.90% stake in the company after the much-hyped IPO last year. Paytm had a forgetful debut as the share price tanked 27% upon listing and closed the day at INR 1,564, a big fall from the issue price of INR 2,150. Now, the company’s stock is priced at INR 917.35, which is a whopping 57% lower than the listing price.
Sharma’s stake in the company is now worth INR 5,292 Cr ($700 Mn) vs INR 6,452 Cr ($850 Mn) one week ago given the global stock market crash. The fintech giant’s market cap has fallen to INR 59,469 Cr (around $7.9 Bn), a sharp fall from the INR 72,499 Cr (just under $10 Bn) last week.
Paytm’s stock has been called a bubble by many observers. The share price has gone from bad to worse since listing — it is currently trading at around INR 900, almost 55% down from its issue price of INR 2,150.
Deepinder Goyal’s Zomato Stake Down By $110 Mn
From the week-ago period, Zomato’s stock has lost nearly 32% of its value and ended Monday at INR 91.40, a fall of 19% from the day’s opening price.
Zomato has been trading at significantly lower than its listed price for the past week and ended Monday, January 24, 2022, at INR 91 after losing nearly 20% value in one day.
Given the 32% drop in the stock price since last Monday, the worth of Zomato CEO and cofounder Deepinder Goyal’s 4.69% stake in the company also fell. Goyal’s 36.9 Cr shares in the company are worth INR 3,376 Cr ($500 Mn) vs INR 4,963 Cr ($661 Mn) a week ago.
The company’s market cap has fallen to INR 71,944.51 Cr (just under $10 Bn), whereas the market cap had crossed the INR 1 Lakh Cr on the first day of listing in July last year.
MapmyIndia Promoters Holding Down By $109 Mn
The mapping and location services company had one of the most successful IPOs last year owing to its dominance within this sector and the diversified business model.
MapmyIndia saw its market cap fall to INR 7,704 Cr at the end of the trading session on January 24, 2022 amid the stock market crash, falling by INR 1,525 Cr over the past week. Its share price has fallen from INR 1,862 last week to INR 1,447 Cr on Monday.
The promoters and the promoter group of MapmyIndia holds 53.73% stake in the company after the listing. Chairman Rakesh Kumar Verma holds 43.50% in the company, followed by wife Rashmi Verma (9.68%) and son Rohan Verma (0.53%). The promoter and promoter group holding is worth INR 4,139 Cr ($550 Mn+), but the decline in share price over the past week resulted in a loss of INR 819 Cr ($109 Mn).
Policybazaar Founders Lose $50 Mn
After its listing in November last year, online insurance marketplace Policybazaar’s parent company PB Fintech, had closed the opening day with a market cap of INR 54,070 Cr, with the stock at INR 1,202.90, nearly 23% higher than the issue price.
But in the past week, the company’s share price has tumbled from INR 1,008.85 to INR 775, a drop of 23%. Since last week, the two founders have lost a total of 16% from the worth of their holdings, resulting in a loss of INR 365 Cr ($50 Mn).
The company’s market cap has also plummeted to INR 34,908 Cr, which means cofounder Yashish Dahiya’s 3.84% holding in the company is now worth INR 1340 Cr (roughly $190 Mn). Cofounder Alok Bansal’s 1.30% stake is now worth INR 453 Cr (roughly $60 Mn) after a torrid week for the fintech company.
RateGain Founders Lose $50 Mn
At the end of the trading day on Monday, January 24, travel tech company RateGain’s stock price had fallen to INR 401.30 from the week-ago price of INR 496.
The drop of nearly 20% in the past five trading sessions has resulted in the company’s market cap falling by INR 800 Cr ($100 Mn+), which has had a deep impact on the worth of founder and promoter group’s holdings.
The total 56.58% stake of founder Bhanu Chopra and family is now worth INR 2,399 Cr ($300 Mn), down by INR 400 Cr in a span of just a week.
Fino Promoters Holding Down By 10%
In the case of Fino Payments Bank, the promoter entity Fino Paytech Limited, continues to hold 75% of the company even after the public listing. The promoter group comprising Rajeev Arora, Rishi Gupta, Shailesh B Pandey, Amit Kumar Jain, Ashish Ahuja, Viprraj Bhardwaj holds stake in the listed company Fino Payments Bank Ltd through Fino Paytech Limited.
The fintech company’s market cap has fallen by 10% in the past week from INR 3,415 Cr to under INR 3,152 Cr, a loss of more than INR 250 Cr (over $20 Mn). As a result, the value of the promoters’ holding fell from INR 2,561 Cr to INR 2,364 Cr.
Fino’s stock closed Monday, January 24, 2022 at INR 378.85, down from INR 414 in the previous week. The bank’s stock fell by 3.3% in the day’s trading.
CarTrade Promoter Stake Worth Down By 10%
Automobile marketplace CarTrade had a tepid public markets debut last year, finishing its opening day more than 10% lower than the listing price of INR 1,600.
CarTrade had a market cap of INR 3,930 Cr last week, which plummeted to INR 3,573 Cr, a fall of over 10%, by the end of trading on Monday, January 24, 2022. Since its debut last summer, the stock has seen plenty of crashes and is currently trading at INR 768, almost 50% lower than its opening day price. In comparison, last week, the stock opened at INR 844.
The promoter group of founder Vinay Sanghi and family holds 2.14% of the company after the IPO, which equals 9,80,763 shares worth INR 75.3 Cr. The drop in share price over the past week has eroded INR 7 Cr from Sanghi’s holding in the company.
Will Listed Tech Companies Bounce Back?
Given the stock market crash across sectors, investors and market analysts believe a major price and valuation correction is imminent in the Indian market.
So far, the primary objective of Indian tech IPOs has been to raise capital from the market at the time of listing. In that sense most of these tech companies have been successful in their listings, but the ongoing decline will affect future listings of tech companies in 2022.
The nosediving of tech stocks also shows that founders and promoters have shown little to no control over the share price in the market, particularly since they also lack profitability. To turn things around, tech companies have to fight off competition without overspending, achieve profitability and also solve the lack of clarity in business models to win over investors once again.
