The rally followed the company’s investor day presentation on June 26. With today’s rise, Nykaa’s stock is up 25% year-to-date and is now just 11% below its 52-week high of ₹229.80.
Global brokerage firm CLSA has maintained an ‘Outperform’ rating on the stock, with a target price of ₹229 per share.
The brokerage wrote in its note that Nykaa expects a mid-20% GMV CAGR for its BPC segment from FY25–30; CLSA forecasts 23%.
Net sales value (NSV) of the fashion business is estimated to grow 3-4x in five years, though CLSA expects under 2x growth.
Fashion segment EBITDA margin is expected to be 0% in FY26, reach mid-to-high single digits by FY28, and hit 10% in steady state.
CLSA believes that if Nykaa executes well, it could lead to significant earnings upgrades.
Nomura has a ‘Neutral’ rating on Nykaa with a price target of ₹216. The brokerage said that the company is aiming for a 22–25% revenue CAGR and expects its fashion segment to break even by FY26.
According to Nomura, India’s BPC market is estimated at $24 billion in FY25 and is projected to grow to $40-45 billion by FY30, implying a 10–12% CAGR. The online BPC segment is expected to grow much faster, at 23-25% CAGR.
India’s fashion market is currently valued at $100 billion and is expected to expand to $185-200 billion by FY30, also at a 10-12% CAGR.
The online fashion space is likely to grow at a stronger 22–25% CAGR.
Nomura expects Nykaa’s overall revenue to grow by 26% in FY26 and 25% in FY27.
Numava, which has reiterated a ‘Buy’ rating and a price target of ₹235, said the management’s focus remains on sustainable growth by adding quality customers to the funnel rather than discounting products.
On the flip side, Macquarie has maintained an ‘Underperform’ rating with a price target of ₹145, saying the growth targets were largely reiterated. It also sees a risk to beauty margin estimates due to higher delivery costs associated with the Nykaa Now expansion.
Additionally, Citi has a ‘Sell’ recommendation on Nykaa with a price target of ₹160 per share, while HSBC has a ‘Hold’ rating with a price target of ₹210.
Here are the key takeaways from Nykaa’s investor day presentation –
– Management focus stays on sustainable growth through investment in customer acquisition rather than discounting products to chase short-term growth.
– Nykaa-Now is available in seven cities and delivery is available between 30 and 120 minutes. QC has few assortment while Nykaa is able to have largest assortment. The aim is to scale this up to 10 cities.
– The fashion segment is likely to achieve EBITDA breakeven by FY26, then improve it to mid-to-high single digit by FY28E and 10% EBITDA margin at the steady state level in the medium term. eB2B would require scaling up to 4x its current level to reach EBITDA breakeven.
