Nykaa Shares Fully Valued Despite Sweet Spot In Beauty: Motilal Oswal Initiates Coverage — Check Target Price
As per Motilal Oswal, Nykaa is riding the three key pillars of growth - deepening market penetration, premiumisation and boom in the Direct-to-Consumer (D2C) brands.
Shares of FSN E-Commerce Ventures Ltd., popularly known as Nykaa, will be in focus heading into Tuesday's trade after Motilal Oswal initiated coverage on the counter.
The brokerage firm has issued a mixed note on the lifestyle retail brand, arguing that all the positives on the counter have already been priced in, thus effectively limiting upside on the stock.
In its latest report, Motilal Oswal has issued a 'neutral' rating on the stock, with a target price of Rs 280.
While Nykaa does enjoy dominance and market position in the online beauty and personal care space, the brokerage noted that the company is trading at a "full valuation," leaving limited room for immediate upside.
As per Motilal Oswal, Nykaa is riding the three key pillars of growth - deepening market penetration, premiumisation and boom in the Direct-to-Consumer (D2C) brands.
The brokerage firm also highlighted Nykaa's unique competitive position, describing it as being in a "sweet spot" as a vertical specialist.
This positioning allows it to defend its turf effectively against broad-based horizontal e-commerce giants and the rising disruption from quick commerce players, the brokerage argued.
A key growth lever for Nykaa going forward could be the portfolio of owned brands, which may drive future profitability.
Moreover, MOSL has identified private labels as the great margin compounder, which will likely support the company's bottom line as the business continues to scale.
Motilal Oswal views the fashion segment as a "strategic adjacency" rather than a core driver of the company’s valuation at this stage.
The focus remains heavily tilted toward the beauty segment, where Nykaa commands a significant leadership premium.
