“We see macro factors aligning (multiple re-rating for growth stocks in India and other regions, tight PE/VC money keeping the competitive environment benign) with micro factors (strong execution reflected in market share gains, margin improvement driving profit upgrade cycle) and supporting share prices,” said Morgan Stanley’s analysts in a client note.
The brokerage said it sees a close correlation between the PE/VC (private equity/venture capital) cycle and the performance of Indian internet stocks.
Agencies“We believe strong revenue growth momentum with a good medium-term outlook on profitability will be a key catalyst,” the analysts said.In the past year, shares of Zomato, Policy Bazaar, Nykaa, Paytm and Delhivery have gained 3.7-165.3% as against the 38.03% rise in the BSE-500 index.
