Shares of FSN E-commerce, which operates under the Nykaa brand, rose 6 percent to Rs 1,350 on the BSE in Thursday’s intra-day trading. This comes after the company announced that the board will meet on October 3 to discuss an initial bonus issue.
Nykaa, said in a regulatory filing: “We would like to inform you that a meeting of the Company’s Board of Directors will be held on Monday, October 3, 2022 to, among other things, consider and approve the issuance of bonus shares to the Company. of the Company in such proportion as it deems appropriate and to seek shareholder approval by letter mail and other approval(s) as the Board of Directors deems appropriate.”
On November 10, 2021, it made a clocked premium of 79 percent on the listing. The issue was priced at Rs 1085 – Rs 1125 while the listing price on NSE was Rs 2018. However, the stock took a beating as new-age tech stocks fell out of favor. It is down 44 percent to date. Meanwhile, Nykaa has underperformed the market over the past three months, falling to 7 percent, against a 7 percent rally in the Sensex. In the past six months, the stock has fallen 17 percent, compared to a 1 percent drop in the benchmark index. The stock had hit a record high of Rs 2,574 on November 26, 2021. On May 12, 2022, it hit a record low of Rs 1,208.40.
While current short-term inflationary pressures will impact consumer durables spending, medium and long-term growth in beauty and personal care as well as fashion remains strong. With the increase in disposable income among younger consumers, and online content-led discovery, beauty & personal care, wellness and fashion consumption are seeing a bigger share of the wallet, Nykaa said in its FY22 annual report.
In the first quarter of FY23, revenue was Rs 1,148.4 crore, up 41 percent from the same period last year. While most of the new age tech companies are reporting losses, Nykaa is one of the few profitable ones, making a profit of Rs 5 crore in the June quarter.
Brokerage firm JM Financial has a buy recommendation for the stock with a target of Rs 1,780 in September 2023. “The holiday season has started in earnest; we continue to believe that Nykaa is well positioned. The company continues to deliver revenue growth despite recent macroeconomic headwinds. The customer base and target categories appear to be relatively resilient,” it said.
Nykaa is engaged in the production, sale and distribution of beauty, wellness, fitness, personal care, health care, skin care, hair care products on the online platforms or websites such as e-commerce, m-commerce, internet, intranet as well as through physical shops, stalls, general trade and modern trade etc.
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