Shares of Nykaa (FSN E-commerce Ventures Ltd) closed in green and gained nearly 6 percent in the opening trade on NSE on January 9, reaching a new 52-week high of Rs. 191.60 per share. This started happening as soon as the company announced its positive Q3 business update on January 07.
It has seen a freefall ever since it was released its March quarter business update and has hit its 52-week low of Rs, 114.3 last year on April 26. However, since then it has recovered a lot by over 59 percent.
Nykaa saw consistent growth across its three business verticals, even after an impact on its discretionary consumption was witnessed due to short-term pressures. The Beauty and Fashion platform in India is expected to grow 3.5x by 2030.
The company also mentioned last year that its store count grew from just 350 in FY22 to 1000 in FY23 and is estimated to cross 2000 stores in FY24.
While this is not it, Nykaa parent FSN E-commerce also expects its GMV (Gross Merchandise Value) growth for the October to December quarter to be in the mid-20s and their NSV (Net Sales Value) growth was around 20 percent on a year-on-year basis.
The company believes that the difference in GMV and NSV growth is mainly due to discounting and pricing, primarily in mass and masstige categories.
The strong customer demand for Nykaa products is reflected by the healthy and consistent underlying order volume growth. Nykaa believes that its reach in the BPC industry has expanded for the quarter and is ahead of industry growth.
The company has a market cap of Rs. 53,530 crores and closed today at Rs. 186.95 versus Rs. 176.90 on the previous day. This S&P BSE 200 stock is held by 9.84 percent of FIIs and 14.3 percent of DIIs – aggregating to over 24 percent Institutional holding.
The company’s revenues from operations grew 36.3 per cent from Rs. 3,773.93 Crores in FY22 to Rs. 5,143.8 crores in FY23, accompanied by profits of Rs. 41.08 crores in FY22 to Rs. 19.26 crores in FY23.
The UK-based financial services company, HSBC has a buy call on Nykaa and has recently upgraded its target price to Rs. 250 per share, irrespective of a relatively weaker festive season, indicating a gain of around 33 per cent.
As mentioned by the brokerage firm the reason behind this is that the company is well-positioned to capture long-term value in BPC with its scale and leadership.
Nykaa parent FSN E-commerce has estimated the combined NSV of all its BPC businesses to grow at low to mid-20s on a year-on-year basis.
The GMV for the quarter is projected to grow at around 40 percent in the fashion vertical, while NSV growth is expected in the low-30s on a YoY basis. Nykaa Fashion saw strong growth in the third quarter, continuing the momentum from the previous quarter. On the other side, for Q3 FY24, the revenue is expected to grow in the low-20s on a YoY basis at a consolidated level.
Written by Shivani Singh
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