Nykaa shares slip 4% as brokerages flag fashion losses after Q4 results. Should you buy, sell or hold?
Shares of
FSN E-Commerce Ventures
, the parent company of Nykaa, fell as much as 3.8% to Rs 195.50 on Monday after the company's March-quarter results showed strong growth in its beauty business but continued weakness in fashion margins, prompting a mixed response from brokerages. While most analysts retained a bullish view on the company's beauty and personal care (BPC) performance, target prices and ratings varied sharply, reflecting divergent expectations on the pace of margin recovery and the impact of fashion segment losses.
Among brokerages,
JM Financial
, Nuvama, IIFL Capital, and Nomura maintained positive views on the stock, highlighting Nykaa's resilient BPC segment and margin expansion, but Kotak Institutional Equities retained a 'reduce' rating, citing expensive valuations and continued weakness in fashion.
Kotak Institutional Equities
revised its target price to Rs 185 from Rs 170, implying a 5.4% downside from Monday's intraday low. The brokerage said, 'We trim FY2025-27 EBITDA estimates by 3-4%, driven by higher losses in fashion and B2B.' Kotak noted the steep 880 basis points year-on-year drop in fashion contribution margins and said, 'Reasonable growth trajectory, but valuations remain rich.'
Nomura
, while maintaining a 'neutral' rating, raised its target price to Rs 216 from Rs 190, implying a 10.5% upside. The brokerage said, 'Nykaa's focus on onboarding new global brands, expanding stores and product curation should continue to drive strong revenue growth in BPC. But margin improvement thus far has been slow and needs to pick up for us to turn more constructive.'
Most brokerages pointed to the robust performance of Nykaa's BPC segment, which saw a 31% YoY GMV growth in Q4FY25 and contributed significantly to margin improvement.
Live Events
JM Financial
reiterated a 'buy' rating and said, 'Nykaa BPC segment is going from strength to strength…despite seasonality-driven operating deleverage.' The brokerage said it expects sharper margin improvement in the coming years, driven by customer repeat purchases and working capital gains. JM set a target price of Rs 250, suggesting a 27.9% upside from the current market price.
Nuvama
also maintained a 'buy' rating, raising its target to Rs 235 from Rs 205. The brokerage cut FY26/FY27 earnings estimates by 6.7% and 6.0%, respectively, but said, 'We are increasing medium-term growth and profitability.' This revised target implies a 20.2% upside from current levels.
IIFL Capital
, too, kept a 'buy' call, with a target of Rs 220, or a 12.5% upside, saying, 'Own brands remain a key growth and margin driver…Nykaa continues to outperform overall Beauty market growth despite competition.'
Fashion margins disappoint
Despite signs of recovery in fashion GMV—up 18% YoY in Q4FY25—margin pressures continue to raise red flags. Multiple brokerages highlighted this as a concern, even as some remained hopeful for a turnaround.
Elara Capital
, which raised its target price to Rs 215 from Rs 195, acknowledged the fashion drag, stating, 'Losses in fashion are likely hitting trough and recovery to be key monitorable.' The brokerage maintained an 'accumulate' rating, with a 10% potential upside.
JM Financial
said it had 'pushed Fashion segment breakeven to FY27', citing ongoing marketing investments that weighed on margins.
Nomura
noted, 'EBITDA margin: Strong in BPC: 8.6%; weak in Fashion: -20%.' However, it welcomed Nykaa's shift in strategy towards proprietary brands in fashion, including lingerie and western wear.
Q4 highlights and full-year context
Nykaa's consolidated Q4FY25 revenue rose 24% YoY to Rs 2,267 crore, while profit after tax surged 193% to Rs 20 crore. However, on a sequential basis, both profit and revenue declined. EBITDA margin for the quarter stood at 6.5%, ahead of consensus estimates, and the company posted a full-year net profit of Rs 66 crore, doubling from FY24.
Nykaa's BPC business remained the cornerstone of growth. For FY25, BPC GMV rose 30% YoY to Rs 11,775 crore. The company continued to scale its proprietary 'House of Nykaa' brands and launched several global labels, including Chanel and Supergoop.
Fashion GMV grew 18% YoY in Q4, but the segment remains a drag on overall profitability.
Should you buy, sell or hold?
Brokerage opinions are split. Bulls argue that Nykaa's differentiated positioning in BPC, global brand partnerships, and improving margins justify its current valuation. Bears point to extended fashion losses and slower margin recovery as risks.
Also read |
Nykaa shares in focus after reporting 193% YoY surge in Q4 PAT
With target prices implying anything from a 5% downside to nearly 28% upside, market sentiment on Nykaa remains divided. The stock may appeal to those willing to bet on the company's long-term growth in beauty and personal care, a segment where it continues to show strong execution. But for others, the persistent drag from fashion losses and an uneven margin trajectory could remain sticking points, at least in the near term.
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
ETMarkets WhatsApp channel
)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
16 minutes ago
- Time of India
Bullion breaks records: Silver hits Rs 1.04 lakh/kg in Delhi; gold gains Rs 430 as global momentum builds
Gold and silver rate today: Silver surged to a record high of Rs 1,04,100 per kg in Delhi markets on Thursday, while gold prices also firmed up sharply, driven by strong global cues and a weaker dollar. Tired of too many ads? go ad free now According to the All India Sarafa Association, silver prices continued their rally for the fourth straight session, jumping Rs 2,000 to scale a lifetime peak. The quoted price is inclusive of all taxes, PTI reported. 'The price of silver reached a new all-time high in the domestic market. The rally is supported by strong fundamentals, higher industrial demand, inflation hedging, and tight global supply,' said Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities. The previous all-time high for silver was Rs 1,03,500 per kg, recorded on March 19. Gold also saw firm upward movement. The price of gold of 99.9% purity rose Rs 430 to Rs 99,690 per 10 grams, while gold of 99.5% purity gained Rs 400 to Rs 99,100 per 10 grams, both inclusive of all taxes. Silver futures for July delivery rallied by Rs 3,833, or 3.78%, to touch a lifetime high of Rs 1,05,213 per kg on the Multi Commodity Exchange (MCX). Looking ahead, Rahul Kalantri, Vice President (Commodities) at Mehta Equities, said the metal could climb further. 'The metal might reach around Rs 1,14,000 to Rs 1,20,000 per kg by this Diwali, but investors should brace for a bumpy ride ahead as market volatility remains high amid global uncertainties,' he said. Gold futures for the August contract also gained Rs 635 to reach Rs 99,214 per 10 grams. 'Gold prices traded higher, supported by a weaker dollar and renewed safe-haven demand amid lingering tariff uncertainty and US debt concerns,' said Jateen Trivedi, VP Research Analyst, Commodity and Currency at LKP Securities. Tired of too many ads? go ad free now He noted that global gold prices had scaled above $3,395 per ounce, while MCX gold traded above Rs 98,450. Spot gold in international markets rose by $21.58, or 0.64%, to $3,393.93 per ounce. Spot silver jumped nearly 4% to $35.80 per ounce. 'Spot silver has surpassed the previous resistance level of $35 per ounce and is trading above that mark, reaching a 12-year high,' added Gandhi. Chintan Mehta, CEO of Abans Financial Services, said investor focus is now on the upcoming US non-farm payroll report, which may offer cues on the Federal Reserve's next move. 'Any new geopolitical developments could add another layer of uncertainty, once again driving investors toward the safe haven of gold,' he added.
Time of India
27 minutes ago
- Time of India
This auto driver earns Rs 30K a day– without driving a single kilometre; here's how
Outside Mumbai's US Consulate, where visa applicants face long lines, tight security, and strict rules, one issue keeps causing stress: what to do with their bags. Since the consulate doesn't allow bags inside and there's no official locker facility, many people are left scrambling for a solution just before their interview. But every day, near the entrance, there's a man quietly offering help. He doesn't drive anyone anywhere, but he's found a simple way to earn a steady income– without even starting his auto. The service that starts with 'bag de do' What looks like just another autorickshaw parked near the consulate is actually part of a clever little service. The driver, who likes to keep things low-key, offers to hold on to people's bags while they go in for their visa appointments. 'Sir, bag de do. Safe rakhunga, mera roz ka kaam hai. Rs 1,000 charge hai,' he tells confused applicants, many of whom have no other choice at that moment. This isn't just a one-time favour– it's a full-time business. Every day, the driver stores bags for around 20 to 30 people. At Rs 1,000 per person, that adds up to a daily income of Rs 20,000 to Rs 30,000. From auto stand to storage hub The process is simple. The autorickshaw is just the starting point. Once someone agrees to hand over their bag, it's not kept in the vehicle– instead, it's taken to a secure location. This spot is reportedly managed with help from a local police officer who provides access to a nearby storage space. There's no online booking, no receipts, and no formal customer service. Still, the service runs smoothly, thanks to routine, reliability, and word-of-mouth. An informal setup, built on trust What makes this setup work is its simplicity– and the trust it has earned over time. Many regular visitors now rely on it without hesitation. Rahul Rupani, one such visitor, shared his experience on LinkedIn. Caught off guard by the no-bag policy, he was unsure of what to do until the auto driver stepped in to offer help. Rupani noted in his post, 'He has created a model built entirely on trust. With no app, no office, and no MBA degree, he earns with just his street smartness and a deep understanding of people.' Online buzz and divided opinions The story has stirred a lot of discussion on social media. While some people praised the autorickshaw driver for finding a smart and practical solution to a common problem, others questioned how safe or legal such unregulated services are, especially around high-security areas like embassies. One LinkedIn user commented, 'Your post has busted his business, income, identity, reg. no…. besides celebrating a jugaad, IT evasion, and exposes an unholy nexus.' Another shared a similar experience, writing, 'Exactly experienced the same last week in Delhi US Embassy where they are using their best of mind to solve a Big problem out and charging hefty from the applicants. Still at the end of they come as saviours. '
Time of India
27 minutes ago
- Time of India
Karnataka home department to procure fuel worth Rs 11crore without tender
Bengaluru: To operate over 2,000 vehicles of the fire and emergency services department, as well as vehicles from home guards and civil defence departments, the govt recently gave exemption to the home department to procure the required fuel for one year through petrocard system. According to the notification issued by the finance department on May 27, the govt exempted the home department from tendering to buy Rs 2 crore worth of fuel from Hindustan Petroleum Corporation Ltd (HPCL). In another notification issued the same day, an exemption was given from tendering to purchase Rs 9 crore worth of fuel, lubricants and other items from HPCL. According to the notifications, a 4(g) exemption was provided under Karnataka Transparency in Public Procurement (KTPP) Act. This exemption allows the home department to directly procure fuel without going through the tender process. However, a condition was placed on the department to ensure quality services at an appropriate price. According to sources, the home department recently requested the finance department for an exemption from the tender process. The fire and emergency services department has over 2,000 vehicles, including fire-fighting vehicles, two-wheelers, and four-wheelers. Home guards department has more than 500 vehicles.
