Nykaa stock gains 9% on strong volumes, logs biggest intraday jump since November

FSN E-Commerce Ventures, the parent company of Nykaa, experienced a 10.5% increase in its shares during today's intraday trading, peaking at a new 52-week high of ₹202 per share. This marked the stock's most significant intraday gain since November 2023, driven by a notable rise in trading volumes. The stock closed the session at ₹200 per share, up by 9.40%.

In today's trade, a total of 53.2 million shares changed hands on both the NSE and BSE, marking a substantial 14-fold rise from the stock's average weekly volume of 3.8 million shares. 

The company, which released its June quarter business update on July 7, anticipates a consolidated revenue growth of 22-23% year-over-year, aligning closely with its annual growth target of 20-25%. Additionally, it expects GMV (gross merchandise value) growth for the quarter to be in the mid-twenties (on a YoY basis).

It projects revenue from its Beauty vertical, which accounts for the majority of the company's revenue, to grow around 22-23% YoY, similar to the consolidated entity's revenue growth. GMV growth is expected to be in the high twenties YoY, aligning with long-term BPC (Beauty & Personal Care) industry trends.

For the fashion vertical, Nykaa expects revenue growth to be lower due to challenges in the overall fashion industry in India, which faces muted demand. The growth was further impacted by limited weddings and festivities, with GMV growth anticipated to be in the mid-teens YoY.

By FY29, the beauty segment is expected to remain the predominant share of Nykaa, while fashion's share is projected to increase from 16% to 21%.

In the beauty segment, the company aims to maintain a market share of 30%+, growing ahead of the market. In the fashion segment, the company targets achieving EBITDA positivity by FY26E.

The company, which entered the GCC market in March with the brand "Nysaa," offers substantial growth opportunities due to the region's high per capita consumption and rapid market growth. The company plans to leverage its expertise in the Indian market to drive profitability and market share in the GCC.

Nykaa plans to open five new stores in FY25, targeting $10–15 million in revenue for the current financial year. Additionally, it aims to launch 70 stores in the next 5 years and achieve a 7% share of the GCC Prestige Beauty Market within this timeframe.

The estimated BPC market size in the GCC is $30 billion, with the highest per capita spending globally at $500. The GCC countries have a 40% female population, with a significant proportion under 25 years old.

In June, global brokerage firm Jefferies maintained a 'buy' rating on Nykaa's stock, setting a target price of ₹220 per share. The brokerage projects a CAGR of approximately 20% for Nykaa's Beauty and Personal Care (BPC) segment over FY24–27, driven by new customer acquisitions.

Jefferies anticipates a growth rate of around 25% CAGR for BPC's gross merchandise value during FY24–27. Similarly, the fashion segment is forecasted to achieve a 25% GMV CAGR. The brokerage values Nykaa's BPC segment at 50 times FY26 adjusted EBITDA and the fashion segment at 2 times FY26 sales.

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