Nykaa share rally continues on bonus issue, check record date; Elara Capital sees 70% upside move

Nykaa share price: Nykaa share on Tuesday, October 4, continued its rally on account of the bonus issue. The stock price jumped nearly 3.5 per cent to Rs 1349.6 and 1348.95 per share on the BSE and NSE intraday, respectively. Earlier on Monday, the counter had jumped 10 per cent intraday, eventually closed nearly 2.5 per cent higher at Rs 1305 per share after FSN E-Commerce Ventures, the parent company of the e-commerce platform, in an exchange filing, informed about the record date for the bonus issue which is November 3. On a closing basis, the scrip has gained 6 per cent on the bourses in the last two sessions.

On the back of a healthy outlook, domestic brokerage firm Elara Capital believes the Nykaa share price could deliver a stellar return of 70 per cent from the current level. It has given a target of Rs 2,211 per share on a long-term basis. 

The stock had hit its 52-week high of Rs 2574 on November 26, 2021, days after making its market debut. Nykaa shares made a stupendous market debut at a whopping 79 per cent premium to Rs 2,018 on the NSE from its issue price of Rs 1,125 per share on November 10, 2021. It had made a 78 per cent jump on debut to Rs 2,001 from the issue price on the BSE.

Nykaa is set to grow its Beauty and Personal Care (BPC) revenue at a higher 32.4 per cent clip in CY20- 25E even as India’s online BPC market likely posts a lower 17.3 per cent CAGR (Compound Annual Growth Rate, in the same period, Elara Capital said. “Nykaa may maintain its dominance with a 26.8 per cent market share in online BPC, led by high repeat customers/usage base.”

“Fashion is also an emerging segment for Nykaa, with a 3.3 per cent market share in the online fashion space. Here too, Nykaa’s revenue CAGR may be 60.4 per cent in FY23E-25E, on a smaller base,” it added.

India’s online penetration is lower at 8/12 per cent for online BPC/fashion, as compared to global counterparts the US/China at 20/35 per cent, respectively, thus, the scope for India to move to premiumization/online shopping is immense, the brokerage said, initiating BUY rating on the stock.