Shares of FSN E-Commerce Ventures, the parent company of Nykaa dipped by nearly 2% after Kotak Institutional Equities downgraded its rating on the firm.

What Happened: Kotak had a “sell” call on the e-commerce firm with a target price of ₹190, representing a 9% downside on the company.

Comparing it with the latest rise in quick-commerce adoption, the brokerage said that Nykaa’s broader product assortment, combined with its focus on content-driven marketing strategies and enhanced personalisation efforts, should position it well to compete against the growing range of offerings and expanding urban presence of quick-commerce companies.

By leveraging these factors, the company can effectively differentiate itself and meet customer demands in an increasingly competitive market.

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The company is already working to expand its same-day and next-day delivery services across 63 cities; however, given the current q-commerce-driven delivery landscape, Nykaa may need to accelerate these efforts to offer even faster delivery options. This may lead to higher fulfilment costs for quick deliveries for the e-commerce company, the brokerage said.

It expects the firm’s per unit delivery cost to inch up FY25 onward.

Kotak has trimmed its FY25-27 EBITDA estimates for the company by 3%-7% as it anticipates lower margins in the beauty and personal care and electronic business-to-business segments.

The brokerage, however, noted that Nykaa's platform remains unparalleled in terms of product discovery, with its stock keeping unit offering significantly larger than the assortment provided by quick-commerce companies.

Price Action: Shares of Nykaa were down 1.45% to ₹208.85 on Thursday morning.

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