At a day’s high of Rs 2,227.50, Nykaa was quoting at 1,602 times its FY21 earnings per share (EPS) of Rs 1.39, commanding a market cap of Rs 1.04 lakh crore.
“The fact that Nykaa’s stock prices are 1,600 times the company’s earnings is concerning. The best thing for a value investor would be to go on a long vacation right about now,” said Nikhil Kamath, co-founder, True Beacon and Zerodha.
Nyka lists at 1600 times price to earnings.They sell cosmetics online, paytm next, best thing for a value stock i… https://t.co/dTAP9LFoai
— Nikhil Kamath (@nikhilkamathcio) 1636520484000
In terms of price to sales, the stock is trading at 38.9 times the FY2021 revenue.
Jyoti Roy of Angel One said the stock was trading at a discount to Zomato’s 54 times FY2021 revenues. “Nykaa is one of the very few profitable unicorns in India and we believe that the company is well-positioned to benefit from the exponential growth in the online beauty and fashion retailing business over the next decade. Given the discount to Zomato, we would recommend investors to remain invested in Nykaa from a long-term perspective,” he said.
Nykaa at 2500 Cr Sales is valued at 95k Cr ( 40 times sales)Marico at Quarterly sales of 2500 Cr is valued at 70k… https://t.co/vaSl6BUo74
— Gurmeet Chadha (@connectgurmeet) 1636518850000
The upside momentum on the stock might continue for 1-2 days before stabilising, said Santosh Meena, Head of Research, Swastika Investmart. “Valuation could be a concern after a big listing gain. The Rs 2,000 level could act as a support level in the near term. Aggressive investors are advised to hold this stock for the long term because it is one of the few stocks in new-edge companies to own into your portfolio,” Meena said.
Sneha Poddar, AVP Retail Research, Motilal Oswal Financial Services, said she was positive about the company’s prospects. She said Nykaa was rightly placed to tap the high-growth online penetration in BPC and fashion market, especially given its leadership position in this segment, the customer-centric approach, profitable tech platform and capital efficient business model. “It is the first of its kind listing in the e-commerce space and thus garnered a lot of interest, validated by the IPO subscription of 82 times. It is one of the very few profitable new-age companies and is the first women-led unicorn, which also attracted a lot of investor interest,” she said.
Investors should cover 50 per cent of their position at current premium and hold the rest with a closing stop loss of Rs 1,850 for a target of Rs 2,500, said Ravi Singh, Head of Research & Vice-President at ShareIndia. “Nykaa has strong fundamentals so investors may hold their position for a longer period,” he added.
