Brokerage house JM Financial launches coverage hero Going forward, it expects Nykaa to continue to strengthen its market leadership in Beauty & Personal Care (BPC) along with increasing market share in the larger fashion segment.
“Our proprietary analysis of Nykaa’s customer engagement metrics and advertising trends across BPC/fashion brands shows that Nykaa has the potential to become the preferred ROI-driven advertising platform for partner brands that will enable strong margin expansion. In addition, we Company We expect aggressive omnichannel expansion to drive significant brand recall and organic customer acquisition,” the note said.
Nykaa is a unique player with profitability making a strong entry at 48.2% FY19-21 CAGR. It has a diverse portfolio of beauty, personnel care and fashion products including its proprietary manufactured brand products. The beauty start-up made its debut in the stock market in early November. Several brokerage firms had recommended subscribing to Nykaa’s public issue for a longer period.
“We advocate that Nykaa should continue to aggressively expand its retail store network as it helps the company drive organic customer acquisition, deliver touch and experience to online shoppers, and also increase consumers’ wallet share. Taps what was being spent personally during travel/outing,” the brokerage said.
However, JM Financial said major downside risks to its targeted pricing include failure of the fashion business, weakening margins due to expansion at the cost of premiumization and lower spend per customer, and a sharp increase in competitive intensity. The buy rating of the brokerage comes with a target price 2,480 per share.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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