Full Breakdown
Surge in India's Internet Stocks Amid Earnings Recovery
10/10/2025, 1:58:04 PM
Recent Performance of Internet Stocks
India's internet stocks have experienced significant gains, with companies like Ixigo, CarTrade, and Nykaa seeing increases of up to 80% over the past three months. This surge is attributed to improved profitability and strong revenue growth, as highlighted by analysts. The Nifty India Internet index has shown that eight stocks have delivered double-digit returns, even as the broader Nifty index declined by 1.4%. Ixigo, for instance, led the rally with an 81% increase, driven by a 73% year-on-year rise in revenue and a 26% growth in profit after tax (PAT).
Key Contributors to Growth
CarTrade Tech has also performed well, with a 45% increase in its stock price, supported by a 105.5% YoY jump in PAT and a 22.3% rise in revenue. Nykaa's shares rose by 30%, bolstered by a 72% YoY increase in PAT and a 23% revenue growth. Other notable performers include Infibeam Avenues, which rose by 18%, and Swiggy, which saw a 12% increase, both benefiting from improved financial metrics.
Changing Investor Sentiment
The perception of new-age internet stocks has shifted positively since 2023, as many companies have demonstrated a commitment to profitability. Analysts from JM Financial have upgraded the internet segment from 'Underweight' to 'Overweight,' citing favorable macroeconomic conditions, including government tax rationalization and recent monetary policy adjustments by the Reserve Bank of India (RBI). This sentiment reflects a broader trend of business diversification among companies like Eternal, Swiggy, and Paytm, which are adapting their business models to enhance profitability.
Criticism and Caution
Despite the positive trends, some analysts caution against viewing the recent stock rallies as risk-free. Anuj Gupta from Ya Wealth Global Research emphasizes the need for investors to remain vigilant regarding earnings reports and sector developments. The market's response to speculative trading regulations by the Securities and Exchange Board of India (SEBI) has also raised concerns among investors about potential impacts on brokerage revenues.
Broader Economic Context
The Indian equity market is currently navigating a complex landscape, with strong domestic liquidity and consumption trends expected to drive future growth. Analysts predict that the upcoming festive quarter will be crucial for confirming demand recovery, particularly in discretionary spending and manufacturing sectors. The anticipated earnings growth in the second half of Financial Year 2026 is expected to be supported by favorable fiscal policies and improving agricultural conditions.
Conclusion
The recent performance of India's internet stocks reflects a significant turnaround in investor sentiment, driven by strong earnings recovery and macroeconomic support. While the outlook remains optimistic, analysts advise caution as the market prepares for the upcoming earnings season, emphasizing the importance of monitoring individual company performance and broader economic indicators.
