FSN E-Commerce Ventures (Nykaa) has been given a ‘buy’ rating and a base target of Rs 1,650, suggesting limited single-digit upside ahead for the stock by Jefferies. The foreign brokerage sees the stock at Rs 900 in its worst-case scenario and at Rs 2,300 in the most bullish outcome. The India Internet opportunity is attracting players across categories, with growth mostly being at the cost of profitability, Jefferies said in a research report dated March 16.
The target price of Rs 1,650 for Nykaa by Jefferies marks a 10.3 per cent upside from Wednesday’s closing level of Rs 1,496.2. The brokerage says Nykaa is “a unique combination of growth and profitability". On Thursday, the scrip was trading 2.3 per cent higher at Rs 1,530.10 on BSE.
“Product assortment, discovery & authenticity drive high repeats and the content ecosystem is engaging. Fashion is growing rapidly but the right to win is yet to be proven. Initiate at Buy - pullback in tech valuation is a key risk," the note added. Jefferies’ Buy rating on Nykaa shares comes with a target price of Rs 1,650 apiece, with its bull case upside scenario price target of Rs 2,300 and downside scenario of Rs 900.
In its base case, the brokerage builds in a strong 25 per cent growth compounded annually in orders for Nykaa BPC over FY22-26, which it said will be led by new customer additions.