Nykaa Share Price: Nykaa share price: CLSA sees 12% upside despite ‘expensive’ tag—what’s driving the bullish view?
Despite steep valuations and a history of underperformance post-listing, CLSA has turned bullish on FSN E-Commerce Ventures Ltd parent of beauty and fashion platform Nykaa. The Hong Kong-based brokerage has initiated coverage with an ‘Outperform’ rating and a target price of Rs 229, implying an upside potential of over 12 per cent from Monday’s closing price of Rs 204.
CLSA’s key thesis: Brand strength over valuation concerns
While Nykaa may appear expensive when viewed through traditional valuation lenses, CLSA argues that the correction since its listing has adequately priced in the negatives. What remains underappreciated, it says, is the company’s strong brand equity in India’s rapidly growing beauty market.
“Nykaa is the clear GMV leader in both online and offline beauty retail—a $16.5 billion category expected to grow in high teens over the next five years,” CLSA noted in its report. The firm also lauded Nykaa’s brand loyalty, omnichannel reach, and its pivotal role in beauty education, especially among first-time users in Tier 2 and Tier 3 cities.
Fashion ambitions face tougher terrain
While the beauty business is seen as Nykaa’s crown jewel, CLSA was more cautious about the fashion segment. “Fashion retail is highly competitive and heavily discount-driven,” it said, acknowledging that Nykaa’s fashion play will need sharper execution in order to scale profitably. Nevertheless, the brokerage believes the brand’s cross-category resonance could be a long-term strength.
Profitability turning a corner?
CLSA is optimistic about margin expansion, projecting a 310 basis points improvement in Nykaa’s EBITDA margins between FY25 and FY28. This, it argues, could be a critical turning point that revives investor confidence and supports premium valuations.
Nykaa shares: Back above IPO price after 5:1 bonus
Shares of Nykaa have climbed over 6 per cent in the last two sessions and closed Monday’s trade at Rs 204. Adjusted for the 5:1 bonus issue, the stock is now trading well above its IPO price of Rs 187.5—a psychological level closely tracked by retail investors.
Should investors follow CLSA?
The brokerage’s view stands in contrast to the broader market sentiment, which has been wary of new-age tech stocks. However, with fundamentals showing early signs of stabilisation and Nykaa’s dominance in the beauty vertical intact, CLSA’s contrarian call may just be worth watching.
