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FSN E-Commerce Ventures (Nykaa) had a number of brokerages update their opinions and share price estimates on the stock following Annual Investor Day 2023. Analysts said Nykaa reiterated its previous aims, with the primary message being a focus on sustainable profitability over aggressive growth.
The event was utilised by the firm to explain on Nykaa’s’realistic’ total addressable market (TAM) and consumer base potential, the reason for technological expenditures, a deep dive on owned brands, and strategic decision making in the beauty and personal care (BPC), Fashion, and Others areas. However, management refused to provide any future advice.
Macquarie has proposed a target of Rs 115, citing the lack of meaningful medium-term growth targets. It expressed concerns about capital-intensive expansion in the face of increased competition. Jefferies, on the other hand, proposed a Rs 200 price target for the stock. Nomura India believes the stock is worth Rs 183, while JM Financial and Elara Securities have price targets of Rs 210 each.
“We continue to forecast a strong 25% CAGR for BPC over FY23-30F.” However, we consider fashion CAGR at 13%, with a terminal year mix of 5% to NSV. We anticipate a 25% CAGR in overall sales from FY23 to FY30F, with Ebitda margin increasing to 12.7% by FY30F (from 5.4%) now. With big expenses on staff costs and warehousing behind us, we expect the consistent margin increase will continue in the coming years,” said Nomura India. Moreover, Nykaa share price targets predication can be differ according to the market condition.
This firm has maintained its ‘Buy’ rating on Nykaa shares, citing the favourable value of 5.1 times FY25F EV/Sales, given the company’s outstanding growth prospects.
Nuvama stated that Nykaa has not provided a particular target, but that Ebitda margins for both the BPC and Fashion segments might be in the low to mid-teens, and Superstore will be at most 3-5 percent and Nykaa share price targets can increase. In addition, compared to previous year, it has managed to minimise marketing and, in particular, fulfilment expenses, according to Nuvama.
“Stable growth in BPC combined with improved profitability is commendable.” Going forward, given the emergence of two big independent beauty platforms in the recent year, we believe cash flow generation (debt moderation) can support re-rating,” said Nuvama Institutional Equities. Nykaa is valued at Rs 186 by this brokerage. According to the company, Nykaa share price targets are trading at 5 times FY25E EV/sales, compared to 4.8 times for rivals in the offline retail industry.
JM Financial views on Nykaa share price targets
According to JM Financial, Nykaa’s segments have the potential to develop at multiples of base sector growth rates, with significant margin expansion opportunities driven by increasing BPC/Fashion consumption per capita and premiumisation.
“We continue to believe in Nykaa’s right to win in BPC (both B2C and eB2B), while expecting the Fashion segment to focus on sustainable growth in premium fashion,” JM Financial said.
Elara Securities has maintained its objective of Rs 210, valuing the BPC segment at 60 times EV/Ebitda one year ahead and not assigning any value to the fashion and other businesses for the time being.
“Nykaa aspires to outperform the industry in terms of revenue growth.” “In the near-to-medium term, we estimate a revenue CAGR of 25.8 percent in the online BPC segment, driven by intensifying competition,” it stated. Moreover, Nykaa share price targets predication can be differ according to the market condition.