After 38% downfall, can Nykaa stock regain its lost charm anytime soon?

economictimes.indiatimes.com:

Nykaa) remain encouraging, it has failed to reflect in the performance of the stock in recent months. After seeing rampant selling in 2022, shares of most new-age consumer technology companies rebounded sharply in 2023. However, the “Nykaa” brand owner is missing from the list.

Year-to-date, online food delivery aggregator Zomato has given 25% returns, Policybazaar platform owner PB Fintech gave 54% returns, while Paytm parent One97 Communications has given a handsome 61% return. On the contrary, shares of Nykaa dived over 7% in the same period and even touched a 52-week low of Rs 114.25 in April. In fact, in the last one year, it has shed close to 38%.Why The Underperformance?A series of top management exits and challenges in growing the profitability have been the major triggers for the underperformance of the stock.

In early 2023, the beauty products online retailer’s chief commercial operations officer, chief business officer, chief executive of wholesale business, Nykaa Fashions’ business vice president and vice president finance left the organisation. A couple of months back only, the company has appointed a new chief financial officer and a few senior leaders in verticals across technology, product, finance, legal, marketing, and business. Nykaa has also been facing challenges in improving its operational performance even as the revenue has seen a steady growth.

From a high of 53.4% in the March quarter of 2022, the company’s operating margin shrunk to 20.3% in the September quarter. While the profitability improved to 30% in the March quarter of 2023, some analysts have flagged concerns on this front given the stiff competitive environment. “Going forward, comfort on competition, given two large independent