Nykaa Stock Tumbles 3% After Q4 Results As Brokerages Show Mixed Feelings

Shares of beauty ecommerce platform Nykaa closed Thursday’s (May 23) trading session 2.85% lower at INR 173.95 on the BSE. 

The decline came just a day after the startup reported its financial performance for the fourth quarter (Q4) of the financial year 2023-24 (FY24). 

On May 23, Nykaa’s stock opened with an intraday high of INR 185.4. By noon, the stock had fallen below the INR 180 mark, before witnessing a massive selloff in the last hour of the trading session.

At the end of the day, Nykaa’s market capitalisation hovered around the INR 49,686.37 Cr mark. 

Meanwhile, brokerages had mixed feelings towards the stock. JM Financial reiterated its “BUY” rating on the stock and increased the target price for Nykaa to INR 220 apiece from INR 210 earlier. 

“Overpowering the recent discretionary spends slowdown, Nykaa reported robust 30%/27%/68% YoY growth in BPC/Fashion/Others segments… [The] company reported strong operating metrics across transacting users, conversion and AOVs, indicating rising business momentum. We reiterate a ‘BUY’ rating with a TP of INR 220,” JM Financial said in a note.

Similarly, Kotak Equities gave the stock an “ADD” rating with a target price of INR 195. It termed the discretionary consumption “lacklustre” for Nykaa in FY24 but lauded the company’s growth in the same fiscal. 

However, ICICI Securities downgraded the Nykaa stock to a “HOLD”, while maintaining a price target of INR 175. The homegrown brokerage cited margin concerns and growing competition from other players in the space as the reason for this. 

“While the revenue growth trajectory is improving, ad revenue growth (as a proportion of GMV) remains muted. Also, increasing competitive intensity from other channels/players and its potential impact on margin remains unclear at this point. We downgrade to HOLD on margin concerns and maintain our DCF based TP of INR 175,” ICICI Securities said in a note.

Notably, Nykaa’s net profit tanked 48% sequentially to INR 9.07 Cr in Q4 FY24. Meanwhile, operating revenue also declined 6% QoQ to INR 1,667.9 Cr in the period under review from the previous quarter’s INR 1,788.8 Cr. On a YoY basis, both profits and revenues were up during the quarter.

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