Nykaa Share Price Down 40% from High - Is it a Buy, Sell or Hold?

Nykaa Share Price: What is happening?

Fsn E-Commerce Ventures Ltd (Nykaa) got listed on exchanges in November 2021 at an issue price of Rs 1,125 (upper band). Nykaa's share price made a stellar listing on the stock exchanges and opened at Rs 2001, up 78%.

On the listing day itself, the price touched a high of Rs 2235 per share. On November 26, Nykaa's share price touched a lifetime high of Rs 2,493 per share.

However, since then, the Nykaa share price is continuously falling, and currently, it is down 40% from its all-time high. Nifty50 had given 10% returns in the last one month. Despite the broader market rally, Nykaa's share is only up by 3% in the same period.

Quick fact: Among the recently listed new-age companies, Nykaa is the only profitable company. Despite the fall, the share price is up 27% from its issue price. It never breached its issue price level of Rs 1,125.

Let's deep-dive into Nykaa share price movement:

Why has Nykaa's share fallen from it's all-time high?

Below are some reasons for the fall in Nykaa's share price:

All Indian and global tech stocks have corrected between 20% to 50% since the start of November 2021. Nykaa comes in the same pool.
Another reason cited by brokerage firm Jefferies was its higher valuation. In the last round ahead of its IPO, the company was valued little under $2 billion, but the IPO came at $8 billion, and post the bumper listing gains, the market cap stood at $13 million. A correction was due.
For Q4FY22, the company reported a fall of 49% in its quarterly net profit. As a result, the share price did not find a trigger to move up.

Nykaa Share Price Insight

Out of 187 trading days that Nykaa has been listed, below are the Nykaa share price movement insights:

Nykaa share price ended in green on 94 trading days
Nykaa share price ended in red on 93 trading days

Update from Nykaa’s Apr-Jun 23 results

Revenue: The company reported an increase in its revenue, up 41% year on year, and stood at Rs 1148 crore. In the year-ago period, the company reported revenue of Rs 817 crore in Q1FY22.

Net profit: The company reported a net profit Of Rs 4.55 crore for Q1FY23 compared to Rs 7.58 crore profit in Q4FY22 and Rs 3.41 crore profit in Q1FY22.

EBITDA: For Q1FY23, EBITDA was up 71% year on year to Rs 46 crore, while the EBITDA margin also improved to 4% vs 3.3%.

Margins: The gross profit margin improved by 380 bps year on year in Q1FY23.

GMV: The fashion retailer's gross merchandise value, or GMV, also increased 47% year on year to Rs 2,155.8 crore.

Nykaa Share Price: Buy, Sell or Hold?

JM Financial: The brokerage firm has maintained a BUY rating on Nykaa with a target price of Rs 1730, signaling a good rise in the counter. The firm has tweaked its estimates citing near-term risks. The firm believes that Nykaa has made strategic investments in, owned brands, fulfillment capabilities, and brand recognition that will continue to bear fruit in the medium-term.

ICICI Securities: It has maintained a HOLD rating on Nykaa with a target price of Rs 1,351. The firm said in its report that the competition is likely to intensify from both vertical and horizontal peers. They expect BPC revenues to grow. However, Nykaa’s journey could be different – it will have to go more mainstream to drive this growth.

Also read on Nykaa share price:

The stock recommendations in this blog are by the respective research analysts and brokerage firms. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

Nykaa Share Price: Will it ever touch it's all-time high?