Shares of FSNE-Commerce gambles Ltd, the parent of cosmetics-to-fashion retailer Nykaa, fell as much as 2 per cent on Monday after brokerage house Macquarie initiated content on the stock with an ‘underperform’ standing. The brokerage establishment kept a target price of ₹ 115 per share, motioning a strike of 22 percent from Nykaa’s current request price of ₹147.8 all. “With larger D2C brands decreasingly looking to move offline and guests demanding more physical stores to witness products, we believe Nykaa would need to reinvest influence earnings to sustain growth,” said the brokerage.
It also said that the entry of big players like Tata Cliq and Reliance Retail in the beauty perpendicular can complicate the problems for the incumbent. It must be noted that Reliance Retail lately forayed into the beauty ecommerce order with a platform named Tira. Shares of Nykaa fell as much as 2.8 to INR 145.55 on the BSE during the intraday trading on Monday.
Still, they recovered to end the day at INR 149.55. Beyond Nykaa’s beauty and particular care (BPC) member, Macquarie raised enterprises on the fashion vertical saying that its success in that business is yet to be proven. “We remain concerned about Nykaa’s capability to profitably grow in the fashion member where the company offers a curated business of third party/recently developed own vesture brands,” the brokerage note said. “An analysis of offline retailers indicates that players using a curation-led approach with third party brands have seen limited success,” according to the exploration note.
The brokerage also sees a delicate path to profitability with Nykaa entering the business of serving small pop stores, and hence contending with a well-waxed distribution network that comes with veritably thin periphery. Shares of Nykaa made an astral table on bourses on 10 November, 2021, rising 82 per cent to ₹ 2,054 on NSE against the IPO issue price of ₹ 1,125. The request cap of the company tumbled to ₹ 45,983 crore on BSE.