Athira Sethu
Bengaluru, 18 March 2025
Shares of several new-gen firms, particularly those that debuted on the stock exchanges in the past few years, have declined considerably. Almost half of the 15 new-gen companies listed after 2021 are now available at lower prices than their respective IPOs.
Paytm, Delhivery, and Honasa Consumer-parent Mamaearth are some of the worst-affected ones. For instance, Paytm’s shares have fallen over 65% since their IPO, and Delhivery’s shares are available at a 46% discount to their issue price.
There are some reasons behind the poor performance of these stocks. To begin with, company-specific reasons such as weak financial performance, regulatory issues, or restructuring attempts have come into play. Paytm, for instance, took a regulatory hit when Reserve Bank of India put a limit on its Payments Bank’s ability to provide some services. This resulted in the stock dropping steeply.
Honasa Consumer, Mamaearth’s parent, has also been battling sagging sales and a significant overhaul of its distribution system, and its stock price has dropped 32% since its November 2023 IPO.
But the correction in these stocks is not specific to company-specific issues. There is a larger trend of market pressure on new-age companies. The overall stock market has been lackluster, with large indices such as Nifty50 and Sensex recording drops of around 5% in 2025. This is because of several factors such as global recession fears, inflation, and an economic slowdown. Foreign institutional investors have also been withdrawing from the Indian market, adding to the dampened mood in the market.
The drop in the share prices of these companies is an indication of investors’ shifting expectations. When these firms initially went public, they were priced on the basis of lofty growth hopes. But with the slowing market and heightened competition, investors are reconsidering if the valuations of these firms are reasonable. This has caused a correction, and investors are unloading shares that no longer justify their growth expectations.
While most industries are feeling the pinch, there are a few companies that are still doing well. Food delivery leader Zomato has beaten its peers, with its stock price almost three times its IPO price. Parent company PB Fintech of Policybazaar has also risen 54% as its revenue grows steadily and it enters new markets.
In summary, though most new-age stocks are being corrected for both company-related problems and wider market movements, there are some companies that have managed to remain on top. This indicates that although the market for new-age businesses may be unpredictable, there are those which can continue to succeed regardless.
