Shares of FSN E-Commerce Ventures Ltd., the parent company of Nykaa, jumped 4% in trade on Monday as brokerages remained positive on the company's growth outlook ahead of its second-quarter results.
The stock is trading at Rs 338.1 apiece on the NSE around 9:32 a.m., gaining around 4.08% from its previous close at Rs 324.9.
BofA maintained a ‘Neutral' rating on Nykaa with a target price of Rs 370, while Nomura retained its ‘Buy' rating with a target price of Rs 411. Both brokerages expect the company to sustain strong growth, although their estimates for margins and the pace of growth differ.
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BofA, Nomura See Continued Growth Momentum
BofA expects another strong quarter for Nykaa's gross merchandise value growth, although the pace is likely to be slower than in the first quarter. The brokerage expects the company's margin to inch up quarter-on-quarter to 8.9%.
However, BofA sees limited room for a positive surprise, noting that consensus estimates have already moved higher.
Nomura, meanwhile, expects strong revenue growth to continue, with the beauty and personal care business sustaining its momentum. The brokerage also expects growth in Nykaa's fashion business to continue accelerating.
Nomura expects Nykaa to report an 8.7% Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin for the second quarter.
The brokerage commentary highlights continued momentum across Nykaa's key businesses, particularly beauty and personal care, while fashion is showing signs of accelerating growth.
Nykaa's Share Price Performance
The stock has been in the limelight for quite some time now, delivering more than a 132% return over the past three years, while rallying around 29% in this calendar year itself.
The current market cap of the company is around Rs 96,841.8 crore, while it is trading at a price-to-earnings multiple of 359.05 times.
With the positive brokerage stance and consensus estimates inching up, investors are likely to focus on the company's second-quarter growth and margin performance.
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