Global brokerage Jefferies is bullish on Nykaa shares (FSN E-Commerce Ventures Ltd) as it believes the company’s outlook is strong across verticals, with financial discipline as well as focus on growth.
At a time when most consumer and Internet firms look for excuses for poor disclosure, sometimes under the guise of ‘competing reasons,’ Nykaa stands out, Jefferies said in a note, adding that the company has since received the listing and its first analyst. Strong revelations followed. The business is built on the same principle, with a promise from the management for more such sessions, covering various aspects of the business.
The buy rating of the brokerage house is nayaka share with a target price of 1,650 per. The reverse scenario is the price target. 2,300, implies a potential increase of 60% from the current stock level, while its downside is the target price 900. The newly listed stock, which made its market debut in November last year, has lost around 31% in 2022 (YTD) so far.
Nykaa provides end-to-end solutions to leading global brands (22 in FY22) including entry strategy, registration, import logistics, warehousing and retailing. It has also partnered with Estee Lauder (Aveda) to open premium salons (co-branded). The company has now decided to create an offline presence for fashion.
“Along with scale, marketing spend has fallen by 9.5% in BPC while increased by 27% in fashion. Management monitors visit to order conversion, which increased marginally to 3.1% and focuses on optimizing the share of existing versus new customers. The EBITDA margin of exit from BPC stands at 10% on account of efficiency gains and the effort is improving fashion trends as well,” the note said.
FSN E-commerce, which operates under the Nykaa brand, reported a nearly 57% decline in its consolidated profit. 7.57 crore for the fourth quarter ended March 2022, mainly on account of fresh investments. Its revenue from operations grew more than 31% 973 crore during the quarter under review, from 740.5 crore in the year-ago period.
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