Nykaa shares tumble 20% so far in this month; analysts find valuation ‘palatable’

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26 Aug, 2025 12:21

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The share price of FSN E-Commerce Ventures, the parent company of fashion and cosmetic retailer Nykaa, continued its slide for another day on January 23 and the stock is now down over 20 percent so far this month.

On the BSE, it traded down over 2 percent to Rs 124 as of 12 noon. The stock hit an all-time low of Rs 120.75 during the day as well, but saw some recovery as low levels. The stock is down 62 percent last year.

The stock has been on a decline ever since the lock-in period for pre-IPO investors and the company brought a bonus issue to stabilise the share price.

But now, some analysts have started upgrading their rating on the stock as prices have fallen a lot and valuation is turning favourable.

“We had always liked Nykaa's business model,” said Manoj Menon, an analyst at ICICI Securities. “That said, after its listing on the Indian bourses, we've been staying on the sidelines due to valuations beyond our ability to comprehend.”

The analyst upgraded the stock to 'add' (from 'hold') with revised DCF-based target price of Rs 145 (from Rs 175 earlier), adding valuation was turning palatable now. He sees some key risks to his call. They include chasing growth at elevated levels that can dilute gross margin, and success in fashion business can be difficult given higher competition in the category.

A few others have also seen opportunity in crisis. “(The) stock has corrected partly due to the global tech sell-off on rising yields and more recently due to the lock-in expiry on November 10, 2022,” said Amit Sachdeva, an analyst at HSBC Securities, in a recent report.

“We believe valuations are now even more appealing and under-appreciate the structural growth opportunity in beauty and personal care.”

Sachdeva pegs the stock at Rs 361.67 in the next one year and has a ‘buy’ rating.

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