- Goldman Sachs rates Nykaa-parent FSN E-Commerce Ventures as neutral with a price target of Rs 280
- Nykaa holds a 40% share in India's beauty and personal care e-commerce market
- Revenue is expected to grow at a 25% CAGR from FY26 to FY28, reaching a $50 billion market by FY30E
Goldman Sachs has given a 'neutral' rating to Nykaa-parent FSN E-Commerce Ventures Ltd. with a price target lower than its current market price, despite the company having a strong growth profile.
The brokerage noted that Nykaa is the largest beauty & personal care e-commerce company in India with a 40% share, one of the country's fastest-growing fashion platforms, and well positioned in the Indian market Beauty and Personal Care (BPC) market.
"We believe Nykaa's differentiated full-stack approach to retailing, combined with its strong execution, positions it well in India's c.US$50 bn online BPC and fashion TAM by FY30E; we expect 25% FY26-FY28E revenue CAGR for Nykaa," GS underlined.
However, it added that Nykaa's premium valuations, with the stock trading at a premium to its global/India peers, already reflect the robust growth profile with long runway as well as the strong moats Nykaa has built in its BPC vertical.
Therefore, the brokerage has rated Nykaa as 'neutral' with a price target of Rs 280, a nearly 17% downside to its current market price of Rs 337.40.
Notably, GS believes that if there is a slowdown in Nykaa's growth, its stock could potentially face de-rating in the future. On the flipside, if the company maintains its growth trajectory, with a steady improvement in margins, its premium multiples could sustain.
Nykaa Q1FY27 Recap
FSN E-Commerce Ventures, the parent of Nykaa, reported a sharp rise in first-quarter earnings, with net profit surging more than three-fold year-on-year, supported by robust revenue growth and strong margin expansion.
On a consolidated basis, Nykaa reported a net profit of Rs 80 crore for the quarter, up 243.3% from Rs 23.3 crore in the corresponding period last year. The profit was marginally below Bloomberg's estimate of Rs 83 crore.
Revenue from operations rose 29% year-on-year to Rs 2,782 crore, slightly ahead of analysts' estimate of Rs 2,762 crore, compared with Rs 2,155 crore in the year-ago quarter.
Operating performance remained strong during the quarter. Ebitda increased 67.8% year-on-year to Rs 236 crore from Rs 140.7 crore, exceeding the Street estimate of Rs 230 crore.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
