Target Price Set at ₹405
Current Market Price: ₹340.90
FSN E-Commerce Ventures, the parent company of Nykaa, has released a pre-quarter business update for Q2-FY27, indicating a sustained growth trajectory in its revenue streams.
The consolidated Gross Merchandise Value (GMV) is projected to ascend by approximately 30%, while Net Sales Value (NSV) is anticipated to surpass 30%.
Furthermore, consolidated net revenue is expected to experience growth in the late 20s percent range.
In the beauty segment, the company has demonstrated robust NSV growth, achieving a late-20s percentage increase year-over-year, surpassing JMFe expectations of a mid-20s growth figure, despite contending with a challenging festive spending base from the previous year.
This impressive quarter is attributed to significant customer acquisition paired with repeat purchases, along with a continued strong performance from House of Nykaa brands and a year-over-year growth in Like-for-Like (LFL) store sales hovering around the early 20s percentile.
The fashion division has also excelled, with expected NSV growth in the late 40s year-over-year, well above JMFe projections of mid-30s, supported by an influx of new customers, broader product assortments, and ongoing success in the partnership with Nike.
As both business units maintain their growth momentum, favorable operating leverage is expected to sustain another quarter of solid earnings performance.
Although similar growth patterns were observed in Q1, the basis for Q2 poses additional challenges due to the shift of festive expenditures to Q3 this year, as opposed to last year’s spending beginning in Q2. This trend bodes well for the upcoming Q3-FY27.
We are retaining our estimates while adjusting our target price to ₹405 from the previous ₹395 and continue to recommend a Buy rating.
Source link: Thehindubusinessline.com.
