Nykaa Shares Could See Up More Than 50%, According to Jefferies

“Product assortment, discovery and authenticity drive high repeatability and the content ecosystem is engaging. Fashion is booming but winning right is yet to be proved. Start on Buy – Pullbacks are a major risk in technical valuation,” the note added. The buy rating on Jefferies’ Nykaa shares comes with a target price. 1,650 each, price target with its bull case upside scenario downside of 2,300 more 900.

Consumer stocks in India enjoy a significant premium given the growth runway and this should likely continue for Nykaa, although the question remains over the appropriate valuation multiple, the global brokerage highlighted. However, competition in core BPC is set to increase and a late entry into a fashion that has strong and deep-pocketed competition as well as pull-backs in technical valuation can act as major risks, according to Jefferies.

“It has a strong content ecosystem with network, TV, beauty book and army. > 3,000 influencers; YouTube based platform has >1m subscribers. Nykaa Prive, a BPC loyalty program, has >2m members. Existing customers drive c.70% GMV and >60% GMV is from Tier 2/3 cities. Lessons from the platform have been translated into their own labels,” the note added.

Founded in 2012 by former investment banker Falguni Nair, FSN E-Commerce Ventures Ltd., which runs an online marketplace for beauty and wellness products Nykaa, has its proprietary manufactured brand products under its two business verticals – Nykaa and Nykaa Fashion. Huh. The newly listed stock, which made its market debut in November 2021, is down more than 27% so far in 2022 (year-to-date or YTD).

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