Are these new-age technology companies performing to their full potential?

While some have been able to achieve profitability targets ahead of schedule, others have faced challenges in achieving their goals due to high competition and heavy discounting. Nonetheless, there are positive signs of growth and improvement in operating metrics, giving hope for better outcomes in the future.

In my latest article, I've summarized the financial performance of the top 5 listed startups in India.

Chasing Profitability: Nykaa's Battle in the Fashion Arena

- Reported over a 70% decline in net profit in Q3FY23.

- Facing a challenge to achieve profitability in the medium term in the fashion and other segments due to high competitive intensity and heavy discounting.

- The long-term growth potential is significant, and losses are expected to reduce significantly from FY23 to FY25 in both these segments due to better scale and improved efficiency.

Paytm: A Phoenix Rising from the Ashes of High Cash Burn and Financial Risks

- Achieved adjusted EBITDA break-even before its stated target of Q2FY24 driven by strong revenue growth across segments, moderation in payments processing and promotion incentives, and controlled indirect expenses.

- Reported positive EBITDA before ESOP cost of Rs 31 crore, three quarters ahead of its target

- Net loss narrowed down, and revenue from operations increased 42% YoY to Rs 2,062 crore.

- Operating metrics are gradually improving, and management is focusing on increasing efficiency and profitability. The company is expected to turn profitable by FY26.

Policybazaar: Navigating Through Rough Waters with Narrowed Losses and Soaring Sales

- Net loss narrowed down while expecting revenues and margins to rise further.

- Net sales increased 66.1% YoY for the quarter ended December 31, 2022.

- Management expects revenues and margins to rise further as agent productivity rises, and benefits of the appointments channel are realized.

Zomato's Golden Growth Plan - Short-Term Pain, Long-Term Gain

- Reported widened net loss.

- Management believes that Zomato Gold’s relaunch will be a big boost to growth and is confident in the company’s ability to generate cash.

- Expects short-term negative impact due to the free delivery benefits of gold membership, but the program will turn profitable in the long term.

- Confident of achieving the adjusted EBITDA breakeven target for the core business (ex-Blinkit) by Q2FY24, and adjusted EBITDA break-even (ex-Blinkit) is possible in Q4FY23 itself if the company executes well and negates the impact of Gold launch.

- Confident in generating cash and achieving adjusted EBITDA breakeven targets.

Delhivery's Market Cap Rollercoaster: From High-Flying Success to Investor Jitters

- Delhivery’s market cap crossed the INR 50K Cr mark in July, 2022. But the startup’s unclear road to profitability and weak near-term projections and the expiration of the lock-in period of its pre-IPO investors made investors jittery, which led to a 41% drop in its market cap in just a month.

- Alibaba, one of its early investors, sold the company’s shares worth $200 Mn, or a 3%stake, last month. The startup’s market cap has now halved to about INR 23K Cr ($2.8 Bn) from almost INR 40K Cr ($5 Bn) in May

Market analysts predict that the Indian market is in a slump right now, but they believe that it is just a passing storm. Once the tides change and the market begins to flourish again, digital startups are expected to spread their wings and soar to new heights. It's like a flock of birds waiting for the perfect weather to take flight and showcase their capabilities.

What are your thoughts on this?