UBS initiates buy on Nykaa with a target of Rs 2750; more than 70 mutual funds raise stakes

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FSN E-commerce Ventures, the parent of e-commerce beauty giant, Nykaa, which made a stellar stock market debut earlier in November, saw its first buy recommendations from a global brokerage firm post listing.

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UBS initiated a buy rating on Nykaa with a target price of Rs 2750 that translates into an upside of nearly 23 per cent from Rs 2236 recorded on 16 November on the BSE, as per data compiled by Zee Business TV.  

The global investment bank said there is a long runway for profitable growth. Competitive advantages should ensure a leading position in beauty and personal care.
The fashion segment is larger but more fragmented with intense competition. The global investment bank values the BPC segment at 20x FY24E EV/sales.

The e-commerce beauty giant listed on bourses on 10 November with a premium of nearly 80 per cent over its issue price of Rs 1125.

The company has logged a 47 per cent jump in revenue to Rs 885.3 crore, even as its net profit declined over 95 per cent to Rs 1.2 crore, on account of higher marketing spend during the September 2021 quarter, compared to the year-ago period.

Also Read: Nykaa’s net profit dips 95% to Rs 1.2 crore in September 2021 quarter…

Data from Trendlyne showed that over 70 domestic mutual funds have raised stakes in Nykaa with 17 funds raising a stake by over 1 per cent.

Nykaa, the largest specialty beauty and personal care (BPC) Platform in India, is the first of its kind listing in the e-commerce space and thus garnered a lot of interest, validated from an IPO subscription of 82x.

Nykaa initial public offering (IPO) was subscribed 82 times on the last of the subscription on November 1, 2021. Of 2,64,85,479 shares on sale, a bidding for whooping 2,16,58,63,836 shares or 81.78 times were made on the final day of the subscription.  

Some of the funds, which increased their stake include names like ICICI Prudential Retirement Fund, SBI Consumption Opportunities, HDFC Infrastructure, SBI Retirement Benefit Fund, and HDFC Multi Asser Fund.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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