Motilal Oswal has initiated coverage on FSN E-Commerce Ventures (Nykaa) with a neutral rating and a target price of ₹280 per share, citing a balanced risk-reward after a strong rally over the past year. The brokerage said Nykaa remains a category leader in India’s online beauty and personal care (BPC) space, where product authenticity, brand trust and guided discovery matter more than aggressive discounting — areas in which the company has built a defensible moat.
According to Motilal Oswal, Nykaa commands around 27% share in India’s online BPC market, operating as a focused specialist in a segment that requires curation rather than commoditised scale. Its inventory-led model, direct partnerships with brands and well-developed omni-channel presence set it apart from horizontal e-commerce platforms, which often face challenges linked to counterfeits, inconsistent assortments and discount-led competition.
The brokerage noted that Nykaa’s tight control on inventory, strong fulfilment infrastructure and growing portfolio of owned brands provide structural advantages that support higher margins and better earnings visibility compared to peers. Meanwhile, the company’s fashion vertical — a newer but fast-scaling business — offers long-term potential but remains in an investment phase where profitability will take time to materialise.
Motilal Oswal has valued Nykaa using a sum-of-the-parts approach. For the BPC business, it assigns a 50x EV/EBITDA multiple, reflecting category leadership, stronger profitability metrics and a favourable competitive landscape, which translates into a per-share value of ₹255. The fashion business has been valued using a DCF model at ₹31 per share. After adjusting for net debt, the brokerage arrives at a consolidated target price of ₹280, implying limited near-term upside.
Motilal Oswal said that while Nykaa’s structural strengths remain intact, the stock’s sharp outperformance in the past year limits scope for significant re-rating in the immediate term, leading to its neutral stance.
Disclaimer: The views and recommendations above are those of Motilal Oswal. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
