NYKAA bumper debut! Is it time for retail investors to add some beauty to their portfolio?

FSN Ecommerce Ventures, the parent of e-commerce beauty giant, Nykaa made a stellar stock market debut on Wednesday as shares were listed on the Bombay Stock Exchange at Rs 2,001 per share.

Shares of Nykaa opened at a premium of 79 per cent at Rs 2,018 per share on the NSE as against issue price of Rs 1,125 per share.  

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Riding the momentum on a listing day, the market capitalisation quickly crosses Rs 1 lakh crore in intraday trade, but it quickly cooled off after initial gains.

The next big question in front of retail investors is – what should investors do if they failed to get an allotment in the IPO, but they still plan to add the stock in their portfolio?

Nykaa is among the few profitable new edge businesses which is profitable, highlight experts. The fundamentals remain strong as it may continue to grow in double digits for many years.

The recent rally was on expected lines and investors who plan to put fresh money can add the stock to their portfolio on dips, suggest experts. The next big target which investors can look for is near Rs 2600.

Also Read: Nykaa shares surge 99% on issue price to Rs 2,235 after stellar debut on bourses

“We are expecting upside momentum may continue for at least 1-2 days then it may be stabilized for some time because valuation could be a concern after a big listing gain however 2000 level could act as a support level in the near term,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

“Aggressive investors are advised to hold this stock for the long term because it is one of the few stocks in new edge companies to own into your portfolio. Fresh investors can accumulate in parts where they can buy 25℅ at the opening of what they want to invest into this stock while if it witnesses any correction towards 1800 level then they can add more,” he said.

Also Read: Nykaa makes strong debut on bourses, opens at Rs 2,001 per share on BSE
 

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.  

“Nykaa is among the rare lucrative new edge businesses furthermore it is a high-growth company and into the right business where it may remain to grow in double digits for many years,” Rahul Sharma, Co-Founder, Equity99, said.

“We are bullish on this counter and see it as a good bet for the long term. Investors might book some quantity considering the bumper listing premium and keep remaining shares for the long term. Anyone who wishes to enter fresh shall wait for little declines near 1900-1850 levels.  Stop Loss - 1650 & TGT – 2600,” he said.

Strong Fundamentals:

Nykaa, the largest specialty beauty and personal care (BPC) Platform in India. It 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.

Apart from leadership in online BPC in India, Nykaa is also one of the fastest-growing fashion platforms in India based on GMV (Gross Merchandise Value).

Nykaa’s key strengths lies in its inventory-led business model for BPC segment, which allows it to offer authentication for all its products and ensures availability and efficient distribution.

“It is one of the very few profitable new-age companies and is the first women-led unicorn which also attracted lot of investor interest. The online BPC market is highly underpenetrated at just 8% in India and is growing at a very fast pace of 60% p.a. over CY16-20,” Sneha Poddar, AVP Retail Research, Motilal Oswal Financial Services, said.

“Given 35% market share of Nykaa in online BPC, we believe Nykaa is rightly placed to tap the high growth digital/online penetration in BPC/Fashion market,” he said.

Poddar like Nykaa given its leadership position in online BPC market, customer centric approach, profitable tech platform and capital efficient business model.

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