Ola, Paytm, Swiggy tumble up to 50% in 2025: Are your loss-making tech bets still worth it?

Time of India

14 hours ago

In the first half of 2025, Indian new-age tech stocks experienced a performance divergence. Ola Electric, Swiggy, and Paytm declined due to execution concerns and cash burn, while Nykaa and PB Fintech surged on profitability improvements. Investors are now prioritizing earnings and sustainable models over growth potential, marking a recalibration in market expectations.
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Turning point or temporary shakeout?
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India's new-age tech stocks saw a sharp divergence in performance in the first half of 2025, as investors recalibrated their expectations and began pricing in execution risk, capital discipline, and earnings visibility. Shares of Ola Electric crashed nearly 50%, Swiggy fell 26%, and Paytm declined 9%, as execution concerns and cash burn drove investors away. In sharp contrast, Nykaa surged 27.4% and PB Fintech rose 14.4% on improving profitability and margin visibility.With investors now rewarding earnings over ambition, the question is whether India's digital darlings are finally being judged by fundamentals, and if that marks a permanent reset in how the market prices tech-led growth.'The sharp correction in new-age tech stocks is a much-needed recalibration rather than a collapse,' said Harshal Dasani, Business Head at INVasset. 'Investors are no longer paying for GMV or user growth—they're paying for execution, profitability, and clarity.' According to Dasani, EV/sales multiples across the board have compressed from 15–18× at IPO to 6–9× now. 'It's no longer about buying into the idea—it's about backing sustainable models.'Gains in Nykaa and PB Fintech have been anchored in visible improvements in profitability. Nykaa reported a Rs 335 crore profit in Q1 FY25 with 46% year-on-year revenue growth, while PB Fintech turned profitable with Rs 353 crore in FY25. 'Nykaa and PB Fintech have stood out due to clear delivery,' said Dasani. 'Markets have drawn a clear line: they're rewarding those showing proof of profitability, not potential alone.'Gaurav Garg of Lemonn Markets said, 'In H1 2025 investors rewarded companies that are already profitable or have a visible, near-term path to profitability… while marking down businesses that still burn cash or have execution mis-steps.' The market, Garg noted, is no longer paying for 'growth at any cost.'Meanwhile, weaker names bore the brunt of the correction. Ola Electric lost 49.7% in the first half of 2025, with sales falling sharply and losses widening. Ola's revenue fell 59% YoY in Q4 FY25 and quarterly loss doubled to Rs 870 crore. Meanwhile, monthly registrations sank 45% YoY in June and market share tumbled. Despite earlier trading at over 40× FY24 sales, the company now trades closer to 4.9× FY25 sales. Garg said that 'unless deliveries rebound and the 4680-cell project shows tangible cost savings, the stock is likely to remain under pressure.'Swiggy, which dropped 26% in H1, posted a Rs 3,117 crore consolidated loss for FY25, weighed down by Instamart. 'Instamart's losses expectedly increased on account of new store scale-up and high customer acquisition,' said Amarjeet Maurya, Deputy VP–Fundamental Research at Kotak Securities. Despite this, Kotak retains a 'buy' rating with a target price of Rs 280 for the stock.Paytm slipped 9% in H1. Although its Q4 EBITDA-before-ESOP turned positive at Rs 81 crore, user metrics dipped and regulatory uncertainty remained. 'Paytm remains in transition,' said Dasani. 'The key is to watch execution trends, not just brand recall.'Zomato's parent, Eternal, fell 5% as growth slowed in its food delivery business, though Blinkit posted strong revenue momentum. 'Blinkit remains best positioned to capitalize on rising quick commerce penetration,' said Maurya, who has a Rs 280 target price and 'buy' rating on the stock.'The sentiment has shifted from exuberance to evaluation. Investors have matured, and so have expectations,' said Dasani. 'This change sets the stage for real wealth creation as capital flows to companies delivering fundamentals, not just narratives.'Post-IPO multiples have reset, said Garg. 'Most names listed on rich revenue multiples (15–35× sales). As the first lock-ins expired, early investors sold aggressively, exposing the mismatch between story and earnings power.' The median FY25 EV/sales for the cohort has dropped from 18× at listing to about 6–8 times.Macro conditions have accelerated the correction. 'Rising real rates lifted discount rates, compressing long-duration tech valuations worldwide,' Garg said. Domestically, startup funding fell 25% year-on-year in H1 2025, curbing risk appetite.Dasani said, 'high-burn models like Swiggy's Instamart show the cracks—reporting a –5.6% EBITDA margin despite scale.' In fintech, 'Paytm's Payments Bank restrictions prove that compliance is now as crucial as innovation.'Investors are becoming selective. 'Stock picking is essential in this space,' said Dasani. 'PB Fintech and Nykaa… are showing strong metrics and execution—making them worthy of accumulation on dips.' However, Kotak has a more cautious view on Nykaa, maintaining a 'reduce' rating with a target price of Rs 185, citing stretched valuations and margin pressures in fashion.Garg outlined differentiated positioning across the sector. PB Fintech is seen as 'premium but justified,' Nykaa as 'fair at 4–5× sales,' while Zomato requires 'wait & watch until Blinkit turns EBITDA positive.' Swiggy and Ola Electric, Garg said, should be avoided until core units turn profitable. 'Execution and cash-flow risk [is] high.'Analysts see the second half of 2025 as a crucial phase that will separate sustainable operators from speculative bets. 'The second half of 2025 will likely reward those with momentum backed by margin expansion,' said Dasani. Garg added that Nykaa and PB Fintech 'could re-rate further' if fashion and credit businesses continue to improve.However, for laggards, the bar is rising. 'Unless Ola Electric demonstrates a sharp volume turnaround and Swiggy reins in Instamart losses, their shares are unlikely to reclaim IPO highs in H2,' Garg said.'The market has pivoted from paying for potential to rewarding proof,' he said. 'Investors should emphasise cash-flow visibility, disciplined capital allocation and regulatory resilience when sizing positions in India's new-age tech champions.': Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)