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Why Brokerages Expect A 30% Upside For Nykaa

Published 13-06-2024, 09:37 am
© Reuters.  Why Brokerages Expect A 30% Upside For Nykaa

Benzinga - Brokerages are bullish on e-commerce firm Nykaa (NS:FSNE) due to its growing beauty and personal care (BPC) business.

What Happened: Global research firms Jefferies and Morgan Stanley (NYSE:MS) are bullish on Nykaa, seeing an upside of 30% and 17%, respectively, from the previous day's closing price as its BPC business could power growth for the company.

Jefferies had a "buy" call on the stock with a target price of ₹220. The brokerage said BPC offers significant headroom for growth as increasing user awareness should drive the category growth. Jefferies sees a clear need among customers who are value-conscious and no just discount seekers as the fashion segment plays in a niche premium market.

Despite tagging the BPC business as growth driver, the research firm sees its margins being range bound in the short term as growth takes priority.

Morgan Stanley had an “overweight” call with a target price of ₹198. The newer personal category items like serums and sunscreens are growing at 100% and home brands at peak could contribute 15%-20% of the gross merchandise value.

However, the competition among beauty brands remains high. The quick-commerce business arm would not be able to keep as much inventory and the company is working on reducing its delivery times, said Morgan Stanley.

Price Action: Shares of Nykaa rose 0.79% to ₹170.55 on Thursday morning session.

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Read the original article on Benzinga

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