Nykaa shares jump 5% as 4 crore shares change hands via block deal

Shares of Nykaa parent, FSN E-Commerce Ventures, rallied 5% in early trade on Friday amid block deal as more than 4 crore shares changed hands over the counter. Harindarpal Singh and associates, a pre-IPO investor, was looking to offload 1.4% stake worth ₹809 crore in the company through block deal, as per report. At the end of June quarter, Harindarpal Singh held a 6.4% share in the online beauty and cosmetics retailer.

Reacting to the news, Nykaa shares opened 2.75% higher at ₹216.20 against the previous closing price of ₹210.40 on the BSE. In the first hour of trade so far, the beauty and fashion stock gained as much as 5.04% to ₹221, while the market capitalisation climbed to ₹62,858 crore.

The counter witnessed strong volume as 4.22 crore shares worth ₹881.56 crore changed hands over the counter as compared to a two-week average of 8.76 lakh stocks.

Nykaa shares touched its 52-week high of ₹228.50 on August 21, 2024, and a 52-week low of ₹131.70 on August 28, 2023. The stock has risen 63% in the past one year; 45% in six months; and nearly 24% in a month. In the calendar year 2024, the largecap stock has surged 28%. The Falguni Nayar-led company, which made its debut on the stock exchanges in November 2021, has given a negative return of 44% since its listing on the bourses.

For the first quarter ended June 30, 2024, FSN E-Commerce Ventures posted a consolidated net profit of ₹13.6 crore, up 152% from ₹5.4 crore reported in the same quarter last year. The operating revenue increased by 22.8% to ₹1,746.1 crore compared to ₹1,421.8 crore in Q1 FY24. The improvement in profitability was credited to the improvement in the bottom line to restructuring and various such measures taken in the recent past.

During the April-June period of FY25, Nykaa’s total gross merchandise value (GMV) rose 25% YoY to ₹3,320.9 crore, with its beauty and personal care (BPC) segment reporting better performance than Nykaa Fashion. The GMV of Nykaa’s BPC business grew 28% YoY to ₹2,542.9 crore, while the fashion division’s GMV was up 15% YoY at ₹774.1 crore.

“Nykaa has delivered strong growth in BPC while Fashion GMV growth missed expectations due to a slowdown in the underlying market. Margin improved YoY largely due to Fashion and B2B,” Nuvama says in a note post Q1. The brokerage house maintained a ‘BUY’ call on the stock with a revised target price of ₹220 from ₹203 earlier.

The brokerage says that the fashion business was impacted by weaker growth in Indian wear as a category since there were no festivals during the April-June period. “We expect sales and marketing expense to remain range-bound as the company focuses on profitable growth. Additionally, operating leverage would be the key margin lever going forward.”

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