Beauty scale

Nykaa will have an ex-date on Thursday for a 5:1 bonus number; the stock loses 4%

Shares of FSN E-Commerce Ventures (Nykaa) slid 4% to Rs 1,091 on BSE in Wednesday’s intraday ahead of the record date of its 5:1 free share issue, i.e. say five free shares for each share held in the company.

The Company’s Board of Directors has set Friday, November 11, 2022 as the “record date” for the purpose of determining members eligible for free shares. The title will become ex-date for the free shares on Thursday November 10, 2022.

FSN E-Commerce Ventures, better known as Nykaa, is a consumer technology platform, providing consumers with a content-driven retail experience through its diverse portfolio of beauty, personal care and fashion, including own brand products.

At 1:58 p.m.; Nykaa was trading down 3% at Rs 1,097.40, against a 0.05% decline in the S&P BSE Sensex. Over the past month, Nykaa has underperformed the market, with its share price down 14% versus a 5% rise in the benchmark.

The stock had hit an all-time low of Rs 975.50 on October 28, 2022. It reached an all-time high of Rs 2,574, which it touched on November 26, 2021. The company made its public debut on November 10, 2022. 2021. .

Meanwhile, Nykaa managed to improve its profitability metrics in the quarter ended September 2022 (Q2FY23). The company’s net profit was up nearly 330% year-over-year (YoY). While margin performance has been driven by revenue growth, the company is also making structural changes that allow it to better control costs.

HSBC Global Research has a buy call on the company’s stock, whose structural attractiveness is underpinned by a strong second-quarter performance. “With its scale, reach and wide product range, Nykaa is a rare combination of profitability and sustainable exponential growth in our view. We expect revenues to double every two to three years over the next decade,” the brokerage said in a report. CLICK HERE FOR THE FULL REPORT

According to HDFC Securities analysts, Nykaa has the potential to be a hybrid, but at present (85% of net sales value (NSV) – based on stocks) it shares more characteristics with a pipeline linear, efficient and busy online. than a platform. Additionally, Nykaa’s Total Address Market (TAM) also appears to be oversold. Therefore, the evaluation templates need to be realigned accordingly.

The brokerage said in its initial coverage report that Nykaa was an effective online business; its success is partly due to the absence of strong competitors (this is gradually changing). Excluding ad revenue, the lack of non-linear monetization levers forces us to realign our valuation compass somewhere between a linear business and a pure platform, he added.