Is Nykaa a ‘Buy’ now? 3 reasons why brokerages are bullish

The share price of Nykaa has risen 1.5% to a high of Rs 210 after the company held its investor day. The brokerages remained confident about the company after the event and have recommended ‘Buy’ on the stock. There are many reasons that’s fuelling the bullish call.

Here are some key brokerage takeaways from the event –

Nuvama on Nykaa: Improvement in profitability due to lower losses

Nuvama Institutional Equities retained its ‘Buy’ rating on Nykaa, with an unchanged target price of Rs 235. The company expects the BPC business to grow at a mid-20% CAGR during FY25–30. Fashion business to attain EBITDA margin breakeven in FY26. House of Nykaa portfolio GMV (gross merchandise value) to grow to Rs 6,000 crore by FY30. Nykaa-Now available in seven cities with a target to expand to ten cities. Peak capex in warehouse/office infrastructure is almost behind.

“We continue to reckon an improvement in profitability on the back of lower losses in the fashion and eB2B segments,” said Nuvama.

Nomura on Nykaa: BPC and Fashion share to rise to 39% by FY30

Nomura maintained its ‘Neutral’ rating on Nykaa, with a target price of Rs 216, implying an upside of 11%. According to management, India’s lifestyle and discretionary consumption categories continue to offer multi-year growth potential. Increasing order frequency, higher digital participation, and a widening base of premium users should drive online BPC and Fashion’s share to rise to 39% of $170-190 billion E-commerce market in FY30 from 35% of the $60 billion market in FY25, said Nomura.

The company aims to grow its GMV by mid 20% levels until FY30. This vertical has consistently delivered a five-year CAGR of 36%, underscoring its leadership in the online premium beauty space in India.

“We also expect margins to continue expanding to 10% by FY27. However, management did not give any guidance for this. For Fashion, we are more conservative with 17%/16.8% growth expectation and margins improving to -7% by FY27,” said Nomura.

JM Financial on Nykaa: Aggressive about BPC and fashion segments

JM Financial has a Buy rating on Nykaa with a target price of Rs 250, implying an upside of 21%. The company has aggressive growth aspirations across the BPC and Fashion segments, with its eB2B business already witnessing strong growth momentum, said JM Financial.

The company guided towards FY26 EBITDA breakeven for Fashion, compared to the brokerage’s estimate of FY27. However, the management refrained from providing BPC EBITDA margin guidance due to its continued focus on growth. “We expect contribution margins to remain stable, with EBITDA margin expansion likely supported by operating leverage,” said JM Financial.

Moreover, the company’s ability to deliver robust growth in a tepid demand environment over the last year, along with margin enhancement, further underlines its differentiated offering.