Shares of new-age businesses extended their slide on Friday with Nykaa, Delhivery, Cartrade Tech, and Zomato falling between 3% and 7% each. Analysts said the expiry of the pre-IPO lock-in period in November 2022 and the sell-off in technology shares in the US have clouded investor sentiment.
ET Ecommerce fell 8.4% in the past one month, with ET Ecommerce Profitable and Non-Profitable indices declining 5.5% and 10.08%, respectively.
Shares of FSN E-Commerce Ventures, which runs the fashion portal Nykaa, plunged 6.3% to close at Rs 983.55, the lowest closing since its listing in November last year. The stock has fallen nearly 23% in the past month and is trading 62% lower than its 52-week highs. The stock hit its record high of Rs 2,574 on November 26, 2021.
“As new age companies such as Nykaa, PB Fintech, Delhivery, and Paytm are expected to see their lock-in expire in November 2022, potential buyers might be spoilt for choice,” said Sachin Dixit, analyst, JM Financial. “There could be a sharp dip in share price if even a small set of investors decide to liquidate their position.”
Rules require pre-IPO investors need to compulsory hold the shares for at least six months from the IPO. Before April 2022, the lock-in period was one year. This lock-in requirement has expired in the case of Zomato and, Cartrade.
Investors worry that the end of the lock-in period could result in a flood of shares in the market as several investors might be tempted to exit because of aversion to technology and startups worldwide.
Shares of logistic firm Delhivery fell over 32% last Thursday and Friday below their IPO price after the company posted muted quarterly business growth this week. Delhivery said its supply chain service and truckload business volumes had shrunk in the quarter that ended September 2022. Delhivery shares are currently trading 51% lower than its 52-week high price and 28% lower than its offer price of Rs 487.
Shares of One 97 Communications, the owner of the Paytm brand, have plunged 70% from their IPO price and are currently trading at Rs 642.45. Similarly, restaurant aggregation platform Zomato’s stock has declined 63% from the 52-week highs and currently trading at Rs 62.60, an 18% lower than the IPO price of Rs 76.