Macquarie said Nykaa’s recent upside in the beauty segment has largely been driven by the strong growth of its owned brands, particularly the Dot & Key skincare portfolio.
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However, the brokerage firm believes that it may be difficult for the company to replicate the Dot & Key growth playbook across its other owned brands or drive similar momentum in third-party brand sales on Nykaa.com.While Nykaa’s strong private-label portfolio has supported earnings-per-share upgrades and target price increases, the brokerage said the current valuation remains demanding.
Macquarie noted that the stock is trading at around 90 times the enterprise value to FY27 estimated pre-IndAS EBITDA, which it says does not adequately factor in potential growth risks.
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Of the 26 analysts tracking Nykaa, 14 have a “buy” rating on the stock, six recommend “hold”, and six have a “sell” rating.
Shares of the company were trading 1.5% down at around ₹256.8 as of 12.50 pm. Over the past 12 months, the stock has delivered a return of more than 52%, but the stock has dropped 7.20% over the last month.
