Shares of Fsn E-Commerce Ventures Ltd, which operates Nykaa, gained nearly 4 percent in Friday's trade after the e-commerce company said that it is maintaining growth ahead of the market. During its investor day presentation on June 16, the firm said it sees a total addressable market (TAM) of $100 billion and targets over $180 billion by 2027. At 12 pm, the scrip was trading 3.70 percent higher at Rs 143 per share on the NSE.

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The new-age stock has been in a freefall ever since it released its March quarter business update. It hit its 52-week low of Rs 114.3 on April 26, 2023, and has recovered 23 percent since then. The stock has lost a staggering 41 percent in the last one year, 16 percent in the last six months, 10 percent year-to-date (YTD), while it surged 10.30 percent in the last one month.

Beauty and fashion platform Nykaa's premium fashion market in India is expected to grow 3.5 times by 2030. The company said its store count grew from 350 in FY22 to 1000 in FY23 and it is projected to cross 2000 in FY24.

Outlook

On profitability, the e-commerce company said that its achieving a better leverage on operating cost. On technology, the firm is scaling up its tech infrastructure to deliver best in class customer and partner experience. On strategic investment, Nykaa is investing in brand building, and capabilities building.

During its investor presentation, the company noted: "Online will continue to take market share from offline." The company has increased its own warehouse capacity by 3.5 times, and is focussing on expanding multiwarehousing capabilities for brand partners.

On IPO funds

Of the total Rs 604.6 crore funds raised from Nykaa's initial share sale, the company has utilised 95 percent of the IPO fund, which is Rs 571 crore as on March 31, 2023.

The company said 5 percent of the IPO fund, Rs 33 crore, still remains unutilised as on March 31, 2023.

Financials

Nykaa posted a 71.83 percent year-on-year drop in its March quarter Profit After Tax (PAT) at Rs 2.4 crore. The company's consolidated revenue rose 33.75 percent to Rs 1,301 crore in Q4. Nykaa's EBITDA margin improved 3 basis points quarter-on-quarter to 5.4 percent.

Following Nykaa's earnings performance, a few brokerages have suggested price targets of up to Rs 210 on the stock. But there remained analysts who see no upside on the counter ahead amid weakening growth.

Kotak Institutional Equities and JM Financial find fair value for the counter at Rs 210. Morgan Stanley values the stock at Rs 188. Nuvama Institutional Equities has set a target of Rs 186 each for the stock. Goldman Sachs and BofA Securities have a price target of Rs 175 each on the stock. Meanwhile, JPMorgan set a target of Rs 125 and HDFC Institutional Equities Rs 120, suggesting potential downside ahead for the stock.

First Published:Jun 16, 2023 12:13 PM IST