Nykaa shares fall over 2% on reports of block deal

Shares of Nykaa fell over 2% in intraday deals on Tuesday on likely block deals on the counter. About 47.1 lakh shares exchanged hands in two blocks earlier during the day, ET NOW reported.

The stock was last trading at Rs 144.75, down 2.39% from the previous close.

The shares have recorded muted performance so far this year, falling nearly 7% on a year-to-date basis. This fall in the online beauty company's shares comes at a time when other internet companies have registered stellar comebacks from the lows seen last year. For instance, Paytm and Policybazaar shares have risen over 50% each this year, while Zomato has gained about 25%.


"There is fundamentally nothing wrong in the business of Nykaa, and I would definitely pick it over Paytm for long-term investment. Now the question is valuation. At what valuation you are picking up these stocks and do the valuations justify the current state of affairs? That is the question. So, one has to wait and watch," said Sudip Bandyopadhyay, Inditrade Capital.

Kotak Institutional Equities has a ‘Buy’ tag on the stock at a price target of Rs 210.

It said that the BPC business of the company remains on a healthy growth trajectory while beauty will likely grow faster than the personal care category.

"Fashion business will sharpen its focus on private labels and customer stickiness will eventually drive lower marketing costs," the brokerage said.

Jefferies, meanwhile, has built in a strong order book of 25%+ for Nykaa BPC over FY22-26E, led by new customer additions. The BPC gross merchandising value (GMV) is expected to see a 25% CAGR over FY22-26E.

The brokerage values Nykaa's BPC at 8 times its FY25E sales and fashion at 2.5 times its FY25E sales to arrive at a target price of Rs 200.

Nykaa posted a 72% drop in its March quarter net profit at Rs 2.4 crore while consolidated revenue rose 34% to Rs 1,301 crore in the same period.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)