Nykaa Q2 Results Review - Growth Acceleration Likely; Margin Uptick Key Trigger: Dolat Capital

Dolat Capital Report

FSN E-Commerce Ventures Ltd.’s Q2 FY25 revenues/gross profit was in-line. Ebitda was tad soft and thus adjusted profit after tax too. Gross merchandise value/rev/gross profit/Ebitda were +24/24/26/29% YoY.

The company is currently grappling a dual challenge of managing rapid growth while maintaining profitability, as multiple segments under-investment mode (viz. fashion, superstore, GCCs etc) limit margin expansion.

However, during their recent investor day, mgmt. guided -

1. Core BPC GMV to grow in mid-to-late 20’s over FY24-28E,

2. Fashion GMV to be ~2.5-3 times in three years,

3. Nykaa Superstore or eB2B to register ~3x growth in GMV in three years.

Robust GMV (and thus revenue) growth will be coupled with healthy margin improvement. Achieving its guidance would be key.

We change our FY25/26/27E revenue estimates by -1.6/2.8/-2.9% and EPS estimates by -47/-21/-12%. Reiterate ‘Accumulate’ rating with target price of Rs 200 at 5x FY27E EV/S (earlier Rs 205 @ 5x FY27E EV/S). At CMP, Nykaa trades at ~73/51x FY26/27E EV/Ebitda and 195/107x PE. Valuations remain extremely rich leaving limited room to err.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.