Citi has maintained its Sell rating on Nykaa, setting a target price of ₹165, reflecting a potential downside of 15% from its current market price (CMP) of ₹194.55. The decision comes despite Nykaa reporting strong growth in its Beauty and Personal Care (BPC) segment, with revenue growth in the “mid-twenties,” slightly accelerating from 23% year-on-year in Q1 FY25. This growth is believed to be driven by increased marketing efforts and enhanced same-day/next-day delivery options.
However, Citi points out sluggish trends in the fashion vertical, with growth in Net Sales Value (NSV) in the early teens, consistent with broader trends in the fashion industry. Despite overall revenue growth in the mid-twenties, Citi remains cautious due to the performance of the fashion segment.
Citi now estimates Nykaa’s revenue growth at 25% year-on-year with contribution/EBITDA growth at 25%/47% year-on-year. The report also expects EBITDA margins to improve by 100bps quarter-on-quarter and 80bps year-on-year to 6.3%.
Current Market Price (CMP): ₹194.55
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