Stock To Buy: Nykaa Shares Can Rally Up To 40%, Top Brokerages Upbeat

Shares of FSN E-Commerce Ventures (Nykaa) witnessed a rally of over 4% in trade on Monday. Current market price of FSN E-Commerce Ventures share is Rs 150.45 per share on BSE. Nykaa shares jumped 17% in last 1-month and declined 34% in last 1-year. Top brokerage firms remain bullish on Nykaa shares. Check details below:

Kotak Institutional Equities Assigns Buy Call: The analyst has assigned buy call to Nykaa share with target price of Rs 210 apiece. If you buy Nykaa shares now, you can get potential return of 40%. As per the brokerage, the Beauty & Personal Care (BPC) is on the healthy growth trajectory and expects beauty to grow at a faster pace than the personal care category. Kotak Institutional said, "The fashion business will sharpen its focus on private labels and customer stickiness will eventually drive lower marketing costs."

Revenue from Beauty & Personal Care (BPC) segment continues to surge and accounts for 70% of the total amount. Out of this, 40% was contributed from existing customers as of March 2022, added the analyst.

Jefferies Retains Buy: The analyst stated, "We build-in strong order of 25 per cent+ for Nykaa BPC over FY22-26E, led by new customer additions. Order frequency is expected to see gradual growth as customer cohorts mature. BPC (Beauty & Personal Care) Gross Merchandising Value (GMV) is expected to grow strongly, at 25% CAGR over FY22-26E. Fashion is expected to continue ramping up on the low base. We build in 30% GMV CAGR for Fashion. We value Nykaa's BPC at 8X FY25E sales and Fashion at 2.5X FY25E sales to arrive at a PT of Rs 200."

If you buy shares of FSN E-Commerce shares keeping price target of Rs 200 in mind, you can get likely return of 33%.

Nomura Gives Buy Call To Nykaa: The analyst maintained buy call for FSN E-Commerce stock with a DCF-based target price of Rs 183. If you buy shares of FSN E-Commerce now, you can expect to receive a potential return of 22%. According to Nomura, "Our DCF (Discounted Cash Flow) valuation factors in 18 per cent revenue CAGR over FY25-40F, with EBITDA margin stabilising at 16 per cent (vs 17.5 per cent). The stock currently trades at 5.1X FY25F EV/Sales, which we believe is attractive given the strong growth outlook."

Macquarie Maintains Buy Call: The analyst maintained a target price of Rs 115 apiece as it sees no tangible medium-term growth targets. It cited concerns over capital-intensive growth amid rising competition.

Meanwhile, JM Financial and Elara Securities have assigned buy call with target price of Rs 210 each.

Disclaimer: The stock has been picked from the brokerage report of JM Financial, Nomura, Elara Securites, Jefferies, Kotak Institutional Equities, and Macquarie. Greynium Information Technologies, the Author, and the respective Brokerage Houses are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.