Nykaa shares fall after Macquarie initiates coverage with underperform, sees 23% downside

Nykaa share price: The stock of FSN E-Commerce Ventures – the parent of Nykaa – fell on Monday after Macquarie initiated coverage on the cosmetics-to-fashion retailer with an 'underperform' rating and a target price that suggested a 23 per cent discount to Friday's closing price. Nykaa shares fell as much as 2.8 per cent to Rs 145.6 apiece on BSE.

Macquarie initiates coverage on Nykaa: Key things to know

Macquarie has assigned a target price of Rs 115 to Nykaa shares, which implies a potential downside of around 23 per cent to the closing price on Friday.

According to the brokerage, the beauty etailer faces risks to its beauty unit margin as growth moves to smaller towns, which are mostly offline, and as the competition threat looms.

In the fledgling fashion segment, experience from physical retail makes the brokerage cautious on the company’s owned brand focus and curation-led positioning, Macquarie added.

What other analysts say

Nykaa continues to present a combination of the largest beauty and personal care (BPC) business in a growth market in India, good profitability metrics and prudent capital allocation, and omnichannel in the ‘true sense’ going online to offline, according to Manoj Menon of ICICI Securities.

Nykaa share price: Historical data

Nykaa shares have lost more than 34 per cent of their value in the last one year, a period in which the Sensex has risen 14 per cent.

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