Stories
Nomura Reaffirms Buy on Nykaa Driven by Strong Revenue Growth
- •Nomura maintained its Buy rating on FSN E-Commerce Ventures (Nykaa), highlighting sustained strong revenue growth across both beauty and fashion segments.
- •Beauty and Personal Care (BPC) net sales value and net revenue are expected to grow in the high 20s, supported by 14 new store additions during the quarter.
- •Fashion NSV growth is projected in the high 40s driven by new customer acquisition, increased brand assortment, and the new Nike partnership.
- •Consolidated GMV and NSV are expected to grow close to 30% and in the low 30s, with EBITDA margin projected at 8.7%.
- •Nomura forecasts steady revenue growth of around 28% for FY27 and FY28, pointing to attractive valuations and consistent margin improvements as key catalysts.
Key Questions Answered
Nomura reaffirmed its 'Buy' rating on Nykaa, expecting strong revenue growth to sustain as Beauty & Personal Care (BPC) momentum remains robust and fashion growth accelerates. Consolidated GMV and NSV are expected to grow close to 30% and in the low 30s, while net revenue growth is projected in the high 20s.
Nomura estimates BPC net sales value (NSV) and revenue growth at around 29% and 27% year-on-year in 2QFY27E. Meanwhile, fashion NSV and revenue growth are expected to reach around 48% and 41%, driven by new customer acquisition, brand assortment expansion, and early traction from the Nike partnership.
Nomura expects Nykaa's EBITDA margin to reach 8.7% in 2QFY27F, up 190 basis points year-on-year, and projects consistent margin improvements to 10% in FY27F and 11% in FY28F. Growth drivers include premiumization, increasing brand partnerships, expansion of own brands, and physical store expansion in Tier 2 and Tier 3 cities.
