Nykaa shares drop 11%. Here's what troubled investors after Q1 results
FSN E-Commerce Ventures, which operates online beauty and fashion retailer Nykaa, fell over 11% to the day's low of Rs 130.10 on the NSE on Monday after a clutch of brokerages spelt out growth headwinds in their post earnings review of the stock. BofA, which has taken a neutral view on the counter, sees competition as a key downside risk while ICICI Securities downgraded the stock to 'Add' and advocated tighter corporate spend to meet margin expectations. Notwithstanding an 'Overweight' stance by Morgan Stanley and a buy view by Jefferies and Nuvama, the selloff was amid high volumes as over 61.79 lakh shares changed hands on the NSE.
On Friday, Nykaa reported a 27% year-on-year fall in profit to Rs 3.3 crore in Q1. Revenue from operations during the first quarter rose 24% to Rs 1,422 crore, as against Rs 1,148 crore in the same quarter of last year. Here is what brokerages recommended:BofA: Neutral | Target: Rs 160BofA remains neutral on Nykaa's prospects and has cut the price target to Rs 160 from Rs 175 on the back miss in the Q1 earnings estimates, a slowing growth and less support to its valuation.
The brokerage in a note said that the downside risk will remain if the competition pressure increases. The pace of margin will be slower going ahead. It said that the Nykaa shares are fairly valued.
It has cut FY23-26 EPS by 17-39%.ICICI Securities: Add | Target: Rs 165ICICI Securities has downgraded the stock to 'Add' while keeping the target price unchanged at Rs 165. Cost-control initiatives yielded a 130 bps YoY contribution margin (CM) improvement in BPC despite a 60 bps YoY gross margin decline as the ad-income from D2C brands was soft as brands increased profit focus (in-line with our expectations). A new ad
. Read more on economictimes.indiatimes.com
