Nykaa: After a 56% decline in 2022, stock rebounds 18% this year; what lies ahead?
FSN E-Commerce Ventures, the parent company of Nykaa, has shown signs of a modest rebound, rising over 18% in 2023 YTD. The turnaround began in May, breaking an almost 11-month hiatus, and was followed by monthly gains of 18.83% in June. Between May 2022 and April 2023, the stock was in the green in just 1 month - February 2023, up 2.3%.
The positive momentum continued with a substantial increase of 26.16% in November. This suggests a recovery or improvement in investor sentiment and confidence in Nykaa's performance, potentially driven by factors such as positive business developments, improved financials, or market perception shifts. However, in December, the stock has already lost 3.6 percent.
It has gained 5.2 percent in the last 1 year, hitting its 52-week high of ₹183.40 on December 18, 2023. However, it is still away from its record high of ₹428.96, hit around the time of its listing (November 26, 2021). The stock has still advanced over 60 percent from its 52-week low of ₹114.25, hit on April 26, 2023.
Nykaa's stock has drawn mixed sentiment from different brokerage houses. Nuvama expresses a bullish outlook, maintaining a target price of ₹187, suggesting a potential upside of 9%. However, the brokerage notes concerns about rising competition and increasing debt, identifying them as factors affecting longer-term visibility and potentially hindering recent re-rating compared to other platform peers.
JM Financial is also optimistic, offering a ‘buy’ rating and a target price of ₹210, indicating a substantial upside of 23%. The brokerage is confident in the earlier-than-expected profitability of Nykaa's Fashion segment. On the other hand, ICICI Securities projects a target price of ₹185, implying an 8% upside.
Read more on livemint.com
