![Nykaa Q3 Results: Profit nearly doubles to Rs 16 crore; revenue up 22% YoY](https://img.etimg.com/thumb/msid-111077305,width-210,height-158,imgsize-100412,resizemode-75/nykaa-q3-results-profit-nearly-doubles-to-rs-16-crore-revenue-up-22-yoy.jpg)
The company's management said that the BPC business will likely remain on a healthy growth trajectory of target gross merchandise value (GMV) growth of mid-to-high 20s over FY2024-28E, while the fashion business will break by FY2026, driven by higher GM, lower marketing spending, and operating efficiencies.
Further, the management also stated that the Gulf Cooperation Council (GCC) business may also scale up with an incremental need of $ 3-5 million of capex in the medium term.
Here is how brokerages view the update:
Bank of America
BofA said that strong growth targets have been laid out across segments. However, they see upside risks and potential surprises if the targets are executed well.
BofA has a 'neutral' rating on the stock with a target price of Rs 186.
Macquarie
The global brokerage firm stated that they liked Nykaa's focus on driving mid to high twenties gross merchandise value growth and expected capital intensity to remain moderate.
Macquarie believes that Nykaa will maintain the beauty EBITDA margin at FY24 levels, given the need for growth investments, suggesting a tepid pace of margin expansion.
Macquarie has an 'underperform; rating on the stock with a target price of Rs 135.
Nomura
"Our DCF-based TP of Rs 203 factors in a 17% revenue CAGR over FY25-40F, with long-term EBITDA margin stabilizing at 15%. The stock currently trades at ~5x FY26F
EV/sales, which we believe is in the fair value zone," said Nomura.
The brokerage firm has a 'neutral' rating on the stock with a target price of Rs 203.
Jefferies
The beauty and personal care segment (BPC) offers significant growth headroom and the increase in user awareness should drive category growth while fashion plays in a niche (premium) market.
The global investment bank sees a clear need among customers who are value-conscious and not just discount-seeking.
BPC margins should be range-bound in the short term as growth is a priority.
Jefferies has a 'buy' view on Nykaa with a target price of Rs 220.
Nuvama
Nuvama stated that the management would continue to focus on growth by investing back in the business, and profitability shall be driven by improved economics of the fashion and retail business.
Nuvama retained their 'buy' rating on the stock with a target price of Rs 203.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
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