Nykaa share price may see 55% more upside in the next twelve months, according to brokerage firm JM Financial. The brokerage has a ‘Buy’ rating on FSN E-Commerce Ventures, the parent company of Nykaa, and has set a target price of ₹210 per share.
It believes the company remains a strong play on India’s secular beauty and personal care (BPC) growth.
JM Financial has maintained its bullish view on Nykaa shares after it conducted a survey, the results of which suggest encouraging trends in beauty spends as well as move towards online shopping across categories.
“With assortment being a key reason for shopping online, Nykaa, with 3,400+ brand partners, is being used by 142 of 203 survey participants with 30% of them buying 50%+ of their BPC needs on Nykaa,” JM Financial said in a report.
While 27% of survey participants belonged to the 33-37 age group, they account for 39% of shoppers spending over ₹10,000 on BPC annually with 90%+ online penetration. Users in this age group suggested higher dispensable income and early signs of aging are the primary reasons for their increased BPC spends from a few years ago.
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Additionally, 80% of Nykaa users have an average order value (AOV) of ₹1,000+ compared to only 32% of non-Nykaa users.
“Nykaa’s owned brands have also garnered consumer affinity with 50% of shoppers while ~45% shoppers also purchase international brands on the platform. Furthermore, 45%+ Nykaa users also use Nykaa Fashion, primarily due to premium selection and latest season designs and would be more likely to shop if it was available on the main app,” the report said.
Nykaa remains the go-to BPC platform with Nykaa shoppers also spending significantly higher and transacting across more categories.
Amazon and Myntra emerged as the two other platforms of significance in participants’ beauty shopping.
Nykaa shares have fallen over 10% this year so far. The stock us down nearly 40% in the last one year.
On Tuesday, Nykaa share price ended 2.41% higher at ₹138.00 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 05 Sep 2023, 03:42 PM IST