After nearly 30% gains in 1 year, global brokerages divided on Nykaa after Q2 business update

Nykaa shares are in focus in Tuesday's session after the e-tailer released its Q2 business update. Nykaa (FSN E-Commerce Ventures Limited along with its subsidiaries) in the period under review witnessed a strong performance with consolidated net revenue growth of mid-twenties in Q2 FY2025 as against the same quarter last year.

Nykaa’s beauty vertical has delivered a robust net revenue as well as net sales value (NSV) growth of mid-twenties, with GMV growth even higher. Strong overall performance was seen across omnichannel
retail business, owned brands as well as eB2B distribution business, ahead of the festive season. Dot & Key, a new age skincare brand, continues to experience rapid growth, with Nykaa expanding ownership to 90 per cent  at the beginning of this financial year.

The Fashion vertical’s NSV growth is seen at around early teens. The acquisition of LBB, Nykaa’s content platform business, continues to perform well, delivering high growth taking the overall vertical’s revenue
growth to early twenties for this quarter, noted the company's release.

In the previous day's session, the stock ended nearly 1 per cent higher at Rs 193.95 per share.

Brokerages on Nykaa after its Q2 update

Morgan Stanley maintains overweight call on the stock with a target of Rs 216. The company logged strong beauty growth while fashion logged similar growth as in Q1. The brokerage expects a gradual recovery in H2 due to the festive and wedding season. The set target implies nearly 12 per cent target.

Meanwhile, Nomura maintained neutral call on the stock with a target of Rs 203. The brokerage said growth improvement on track, led by BPC. Overall, for 2QFY25F, expect consolidated revenue growth of 26% y-y & EBITDA margin at 6% (+50bp q-q). This is still lower compared to FY25F expectation of 29% yoy revenue & EBITDA margin of 7.5 per cent.