Nykaa parent FSN E-commerce Ventures Ltd. went public in November 2021, its shares are listed both on the NSE and BSE — under the tickers NYKAA and 543384, respectively.
The company went public in November 2021, with share price listing at ₹1,125. At the time of writing on April 18, the share price has fallen to an astonishing low of ₹125.60. This indicates a fall of over 89%.
Given such a dismal performance that has cost investors in Nykaa IPO massive losses, is it worth buying into the stock now? Can the share price go up tomorrow or down the line? Here’s what analysts are saying — but before that, it’s important to understand the background and financials of the company.
Nykaa Company Background
Mumbai-based Nykaa was incorporated in April 2012 under the name of FSN E-Commerce Ventures. The company, founded by former Kotak Mahindra Capital managing director Falguni Nayar, hoped to carve its niche in the e-commerce sector through a focus on beauty and wellness products.
The e-commerce sector was quite competitive at the time already with leaders like Jeff Bezos-founded Amazon, Sachin and Binny Bansal’s Flipkart and Kunal Bahl and Rohit Bansal’s Snapdeal.
In this tough landscape, Nykaa found its core competence in beauty and wellness anyway and has since expanded into several other segments.
Nykaa has over the years launched several brands and their sub-brands venturing into developing and selling its own products alongside national and international brands. Some of its brands when it went public included Nykaa Cosmetics, Nykaa Naturals, Kay Beatu, Twenty Dress, Nykd by Nykaa and Pipa Bella.
The company has also launched several lines of brick-and-mortar stores including Nykaa Luxe, Nykaa On-Trend and Nykaa Kiosks.
The company expanded into fashion through Nykaa Design Studio, later renamed to Nykaa Fashion — selling all kinds of clothing and accessories.
In recent news, the company has further chosen to expand on the fashion foray by launching a sub-brand called MIXT — a “fashion-forward” brand targeting young buyers or “Gen Z.”
Nykaa Shareholder Pattern And Promotor Holdings
As of December 2022, promoter holdings in the stock stood at 52.34%. Foreign Institutional Investors (FIIs) held a 11.06% stake in the company. Public shareholding stood at around 30.24%. Mutual Funds held around 4.06% shares of the company.
Monthly mutual-fund shareholding data shows that funds have been cutting stakes in the company. Until February 2023, mutual funds were buying the dip in the company with 30 funds adding shares, but that trend has reversed come March.
When Will Nykaa Share Price Go Up?
To understand whether the share price of a stock has the potential to surge, it is required to study various factors, particularly around the fundaments surrounding the company. Trading history and analyst expectations can just be one among the several important cues — but still provide a good ground in understanding the price action and potention for a company.
Nykaa Share Price History And Outlook
Nykaa’s stock performance has been widely poor at the bourses since going public. The company’s stock price has fallen 34% from its IPO issue price of ₹187.50 and hit a new low of ₹120.50 on March 31, 2023, owing to intense competition and a series of exits from the company.
Nykaa also drew criticism for allegedly violating the “spirit of the law” when it announced a bonus issue whose record date coincided with the lock-in period of pre-IPO investors, thus prompting the Securities and Exchange Board of India (SEBI) to establish regulations to prevent such incidents in the future.
Back in December 2021, the stock reached an all-time high of ₹415.52, and it hasn’t come close to that level since then. In fact, Trendlyne data shows that the stock price has been below ₹150 a piece since mid-February.
Nykaa Analyst Consensus
According to data from TradingView, analysts have a mixed outlook on Nykaa shares. Of the 20 analysts covering the stock, 15 rate it a Buy, 2 rate it a Hold, and 3 rate it a Sell. The consensus 12-month price target for the stock is ₹195.95.
The analysts consider several factors when evaluating Nykaa’s share price and prospects, including the company’s competitive position in the e-commerce sector, its ability to maintain its market share and grow its customer base, its financial performance and growth potential, and the overall economic environment and consumer trends.
Nykaa Analyst Ratings
The following are some of the ratings and target price set by top analysts who cover the Nykaa stock:
- HDFC Securities gave a target price of ₹110 on Nykaa shares on April 26, 2023.
- ICICI Securities gave a target price of ₹165 on Nykaa shares on April 12, 2023.
- Nomura set a target price of ₹214 on Nykaa shares on April 06, 2023, as a long-term pick.
Nykaa Dividend History
Nykaa has not declared any dividends since it went public in November 2021. As the company continues to expand its business and invest in new ventures, it may choose to retain earnings to fund its growth rather than distribute dividends.
That said, when the company ended the lock-in period of pre-IPO investors on November 10 of 2022, Nykaa announced a bonus issue at a 5:1 ratio with November 11 as the record date. The call was met with criticism as although the company stated that it intended to increase retail participation in the scrip, some investors saw this as denying them a fair exit.
As of March 2023, Purplle was Nykaa’s top competitor in terms of monthly website visits, followed by Mamaearth. Nykaa’s ability to effectively compete with these and other players in the e-commerce space will be an important factor in determining its long-term success and growth prospects.
That said, April 2023 saw Reliance Retail introduce its latest offering in the online beauty space – Tira – which could pose as a tough rival to Nykaa over time, at least in the offline space where it takes on other players like Shoppers Stop and Sephora.
According to a 2021 report by global market research platform Statista, India ranks fourth in revenue generation from the beauty and personal care market, just behind the US, China, and Japan. The platform expects online sales to grow by 18.2% in the next few years.
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