3 min read Last Updated : Aug 21 2024 | 3:04 PM IST
Shares of FSN E-Commerce Ventures, the operator of beauty and personal care brand Nykaa, hit an over two-year high of Rs 228.50, as they surged 19 per cent on the BSE in Wednesday’s intra-day trade on the back of heavy volumes. The stock was trading at its highest level since October 3, 2022. It recorded its sharpest intra-day rally since November 11, 2022, when it zoomed nearly 20 per cent.
At 02:44 pm; Nykaa was trading 10 per cent higher at Rs 211.75, as compared to a flat trend in the BSE Sensex. The average trading volumes at the counter jumped over 10-fold. A combined 101.76 million equity shares representing 3.6 per cent of total equity of Nykaa changed hands on the NSE and BSE. The stock had hit a record high of Rs 429 on November 26, 2021.
FSN E-Commerce Ventures is involved in the manufacturing, selling, and distribution of beauty, wellness, fitness, personal care, health care, skin care, and hair care products. These products are sold through various channels, including online platforms such as e-commerce and m-commerce, as well as offline stores and stalls.
Last week, Nykaa reported 152 per cent year-on-year (YoY) jump in net profit of Rs 13.6 crore for the quarter ended June 30, 2024 (Q1FY25), compared to Rs 5.4 crore in the same period last year. The company’s operating revenue for the quarter was Rs 1,746 crore, up 23 per cent from Rs 1,422 crore in the corresponding quarter of the previous year.
The management is confident of accelerating growth going ahead, helped by the festive season. This means revenue growth momentum for the consolidated Beauty and Personal Care (BPC) business (including eB2B) may sustain towards 30 per cent-32 per cent YoY in the nearto-medium term.
While the recent demand environment has not been favourable, analysts at JM Financial Institutional Securities see Nykaa as the dominant player in a segment with strong secular tailwinds and expect sustained compounding returns.
While the brokerage firm said they have raised profitability estimates in omni-channel BPC and Fashion, they build in higher losses in eB2b+ International with cumulative losses of Rs 61.5 crore in FY25-28E before turning EBITDA profitable in FY29. “Rolling forward to September’25, we retain the target price at Rs 230 and reiterate ‘BUY’ rating, expecting the company to deliver robust numbers during the festive period this year,” analysts said in the result update.
Analyst at Elara Capital believe consolidation of Nykaa Man and the eB2B business in Nykaa BPC will positively impact revenue growth for the BPC business by 7-8 per cent. However, at an absolute EBITDA level, this impact could be offset by lower margins (losses in eB2B).
“We assume a margin expansion of 220 bps in the next two years for the consolidated BPC business after factoring in better ad revenue growth and lower losses in the eB2B business. But we largely maintain our FY26E/27E earnings estimates after factoring increased losses in the business, due to GCC. Break-even in the Fashion segment as per guidance and better growth offtake in BPC amidst threat of quick commerce players will drive share price performance,” the brokerage firm said in result update. However, the stock was currently trading above brokerage firm’s target price of Rs 210 per share.
First Published: Aug 21 2024 | 3:04 PM IST
https://www.business-standard.com/markets/news/nykaa-surges-19-on-heavy-volumes-stock-at-highest-level-since-oct-2022-124082100510_1.html
