Shares of Nykaa, Delhivery and other new-age startups decline as lock-in expiry approaches

• ByStartupStory     |    October 29, 2022

On Friday, shares of new-age companies continued to decline, with Nykaa, Delhivery, Cartrade Tech, and Zomato all seeing declines of between 3% and 7%. Analysts said that the sell-off in US technology shares and the expiration of the pre-IPO lock-in period in November 2022 have dampened investor sentiment.

In the last month, ET Ecommerce’s Profitable and Non-Profitable indices both experienced declines of 5.5% and 10.08 per cent, respectively.

The closing price of FSN E-Commerce Ventures’ shares, which operate the fashion portal Nykaa, fell 6.3% to Rs 983.55, marking the company’s lowest closing price since its IPO in November of last year. The stock is currently trading 62% below its 52-week highs after falling roughly 23% in the previous month. On November 26, 2021, the stock reached a record high of 2,574 rupees.

Potential purchasers may not know what to choose, according to Sachin Dixit, an analyst at JM Financial. “New age firms like Nykaa, PB Fintech, Delhivery, and Paytm are expected to see their lock-in expire in November 2022,” said Dixit. “If even a tiny group of investors decide to liquidate their investment, the share price could take a dramatic tumble.”

According to the rules, pre-IPO investors must obligatedly hold the shares for at least six months following the IPO. The lock-in period was one year before April 2022. For Zomato and Cartrade, this lock-in restriction has passed its expiration date.

Because of their antipathy to technology and startups globally, investors are concerned that the end of the lock-in period could lead to a flood of shares in the market.

After the logistics company Delhivery reported subdued quarterly business growth this week, shares of Delhivery plummeted over 32% last Thursday and Friday below their IPO price. Delhivery said that the volume of its truckload and supply chain services had decreased in the three months ending in September 2022. Shares of Delhivery are currently trading 28% below their offer price of Rs. 487 and 51% below its 52-week high.

Shares of One 97 Communications, the company that owns the Paytm name, are now selling for Rs 642.45—a 70% decrease from their IPO price. Similar to Zomato, which aggregates restaurants, the stock of that company has fallen 63% from its 52-week highs and is currently trading at Rs. 62.60, which is 18% less than the IPO price of Rs. 76.

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