On Tuesday, ICICI Securities revised its stance on FSN Ecommerce Ventures stock, known for its brand Nykaa, moving its rating from 'Hold' to 'Add' with a new price target set at INR 195.00.
The shift in rating follows Nykaa's investor day presentation, where the management emphasized its dedication to growth in the Beauty and Personal Care (BPC) segment. The company plans to reinvest savings from scale efficiencies to drive further growth.
The management's strategy indicates that the BPC contribution and EBITDA margins are expected to remain stable in the medium term. This approach, while not fully aligning with broader market expectations, has been met with a positive outlook due to the anticipated sharp profit increase in the fashion and eB2B segments. Additionally, Nykaa's expansion of its global store footprint and the success of its owned brands 'Dot & Key' and 'Nykd' have been highlighted as key achievements.
ICICI Securities acknowledges that a significant re-rating of Nykaa's stock depends on the successful execution of the company's strategic goals. Nevertheless, the firm believes that providing clarity on growth and margin prospects is likely to be beneficial for the stock's performance. The upgrade to 'Add' reflects a more optimistic view of Nykaa's future based on its current operational direction and market initiatives.
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