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Nykaa: Strong growth prospects, but profitability improvement key to re-rating

While Nykaa has a strong brand image and increasing number of active users on the platform, margin pressure in the near term would limit any scope for re-rating

August 11, 2022 / 10:23 AM IST
Nykaa: Strong growth prospects, but profitability improvement key to re-rating

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

FSN E-Commerce Ventures (Nykaa; CMP: Rs 1,390; Market cap: Rs 65,916 crore) has posted a slightly lower-than-expected results for Q1FY23 as EBITDA margins were flat on a sequential basis, despite a healthy growth in revenues. Nykaa is expected to continue the strong growth momentum, driven by product launches in collaboration with reputed brands in both the BPC (Beauty & Personal Care) and the fashion segments. The scale-up of Nykaa Man, E-B2B as well as international business (of own brands) would also...

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