Nykaa shares jump significantly following brokerage firm’s positive CAGR forecast

Indian fashion e-commerce brand Nykaa, aka FSN E-Commerce Ventures, appears to have smoothed over some of its past problems that caught the company’s eye immediately after its much-discussed IPO.

Following a positive forecast report by Indian brokerage firm Elara Capital, the company’s shares rose 3.37 percent or Rs 5.76, taking the price of each share to Rs 176.82.

CAGR will increase by 25%

According to a report by the brokerage firm, Nykaa’s situation is relatively stable as the Mumbai-based company is expected to achieve a compound annual growth rate (CAGR) of 25 percent over the next three years, from FY2024 to FY2027.

In this case, CAGR means the average annual growth rate of an investment over a period longer than one year.

Elara considered the company’s development to be stable in the face of growing competition in the segment. This also comes at a time when major e-commerce companies are diversifying into multiple segments within the e-commerce paradigm.

Currently, Nykaa is said to be facing stiff competition from Reliance Tira and Tata Cliq. When it comes to big brands, traditional stalwarts Amazon and Flipkart, as well as Myntra and Purpelle are some of the other competitors in the market.

Nykaa’s dominance in BPC

According to data compiled by A Minhas, the leader in the cosmetics and personal care, or BPC, segment is Nykaa with 38 percent, followed by Amazon and Flipkart with 20 percent. Purpelle has a total of 10% of the shares. These data reflect market share for 2021.

In 2021, after entering the stock markets, Nykaa’s share value rose to Rs 406.18 per share in November 2021, before falling during the year to Rs 201.10 by October 2021. The stock only recovered in August 2023

BPC itself estimates that its gross value (GMV), i.e. the total value of goods sold on the platform as part of its activities, will increase ninefold.

Posted: Tue, Jun 18, 2024 12:26 PM EST