Nykaa shares slip 4% as brokerages flag fashion losses after Q4 results. Should you buy, sell or hold?

Reuters The persistent drag from fashion losses and an uneven margin trajectory could remain sticking points, at least in the near term.
Shares of FSN E-Commerce Ventures, the parent company of Nykaa, fell as much as 3.8% to Rs 195.50 on Monday after the company's March-quarter results showed strong growth in its beauty business but continued weakness in fashion margins, prompting a mixed response from brokerages. While most analysts retained a bullish view on the company's beauty and personal care (BPC) performance, target prices and ratings varied sharply, reflecting divergent expectations on the pace of margin recovery and the impact of fashion segment losses.
Among brokerages, JM Financial, Nuvama, IIFL Capital, and Nomura maintained positive views on the stock, highlighting Nykaa's resilient BPC segment and margin expansion, but Kotak Institutional Equities retained a 'reduce' rating, citing expensive valuations and continued weakness in fashion.
Kotak Institutional Equities revised its target price to Rs 185 from Rs 170, implying a 5.4% downside from Monday's intraday low. The brokerage said, 'We trim FY2025-27 EBITDA estimates by 3-4%, driven by higher losses in fashion and B2B.' Kotak noted the steep 880 basis points year-on-year drop in fashion contribution margins and said, 'Reasonable growth trajectory, but valuations remain rich.'
Nomura, while maintaining a 'neutral' rating, raised its target price to Rs 216 from Rs 190, implying a 10.5% upside. The brokerage said, 'Nykaa's focus on onboarding new global brands, expanding stores and product curation should continue to drive strong revenue growth in BPC. But margin improvement thus far has been slow and needs to pick up for us to turn more constructive.'
Most brokerages pointed to the robust performance of Nykaa's BPC segment, which saw a 31% YoY GMV growth in Q4FY25 and contributed significantly to margin improvement.
JM Financial reiterated a 'buy' rating and said, 'Nykaa BPC segment is going from strength to strength…despite seasonality-driven operating deleverage.' The brokerage said it expects sharper margin improvement in the coming years, driven by customer repeat purchases and working capital gains. JM set a target price of Rs 250, suggesting a 27.9% upside from the current market price.Nuvama also maintained a 'buy' rating, raising its target to Rs 235 from Rs 205. The brokerage cut FY26/FY27 earnings estimates by 6.7% and 6.0%, respectively, but said, 'We are increasing medium-term growth and profitability.' This revised target implies a 20.2% upside from current levels.IIFL Capital, too, kept a 'buy' call, with a target of Rs 220, or a 12.5% upside, saying, 'Own brands remain a key growth and margin driver…Nykaa continues to outperform overall Beauty market growth despite competition.'Despite signs of recovery in fashion GMV—up 18% YoY in Q4FY25—margin pressures continue to raise red flags. Multiple brokerages highlighted this as a concern, even as some remained hopeful for a turnaround.
Elara Capital, which raised its target price to Rs 215 from Rs 195, acknowledged the fashion drag, stating, 'Losses in fashion are likely hitting trough and recovery to be key monitorable.' The brokerage maintained an 'accumulate' rating, with a 10% potential upside.
JM Financial said it had 'pushed Fashion segment breakeven to FY27', citing ongoing marketing investments that weighed on margins.
Nomura noted, 'EBITDA margin: Strong in BPC: 8.6%; weak in Fashion: -20%.' However, it welcomed Nykaa's shift in strategy towards proprietary brands in fashion, including lingerie and western wear. Nykaa's consolidated Q4FY25 revenue rose 24% YoY to Rs 2,267 crore, while profit after tax surged 193% to Rs 20 crore. However, on a sequential basis, both profit and revenue declined. EBITDA margin for the quarter stood at 6.5%, ahead of consensus estimates, and the company posted a full-year net profit of Rs 66 crore, doubling from FY24.Nykaa's BPC business remained the cornerstone of growth. For FY25, BPC GMV rose 30% YoY to Rs 11,775 crore. The company continued to scale its proprietary 'House of Nykaa' brands and launched several global labels, including Chanel and Supergoop.Fashion GMV grew 18% YoY in Q4, but the segment remains a drag on overall profitability.Brokerage opinions are split. Bulls argue that Nykaa's differentiated positioning in BPC, global brand partnerships, and improving margins justify its current valuation. Bears point to extended fashion losses and slower margin recovery as risks.
Also read | Nykaa shares in focus after reporting 193% YoY surge in Q4 PAT
With target prices implying anything from a 5% downside to nearly 28% upside, market sentiment on Nykaa remains divided. The stock may appeal to those willing to bet on the company's long-term growth in beauty and personal care, a segment where it continues to show strong execution. But for others, the persistent drag from fashion losses and an uneven margin trajectory could remain sticking points, at least in the near term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Hans India

15 minutes ago

• Hans India

Centre unveils Rs 2.3 crore startup challenge to boost renewable energy innovation

New Delhi: The government on Saturday launched an innovative 'Start-Up Challenge' with a total prize pool of Rs 2.3 crore to accelerate rooftop solar and distributed renewable energy innovations in the country. The selected innovators will compete for Rs 2.3 crore, including Rs 1 crore for first prize, Rs 50 lakh for second prize, Rs 30 lakh for third prize, and 10 consolation prizes of Rs 5 lakh each. Last sate for application is August 20 and the result will be announced on September 10. Winners will also gain incubation support, pilot implementation opportunities, and mentorship from domain experts and investors, facilitated by MNRE and NISE, according to a Ministry of New and Renewable Energy statement. The unique national innovation challenge aims to identify and support breakthrough solutions for India's rooftop solar and distributed energy ecosystem. It is being implemented under the aegis of MNRE with support from the National Institute of Solar Energy (NISE), and in coordination with StartUp India, DPIIT. The Start-Up Challenge seeks applications from innovators and startups in India, focusing on four key categories to boost renewable energy adoption. These are affordability – making rooftop solar affordable for low- and middle-income households using innovative financing, modular systems, and circular economy strategies. Resilience is another category, to enhance climate resilience, grid stability, and cybersecurity in solar infrastructure, especially for vulnerable and remote areas. Inclusivity – expanding access to underserved communities through community solar, virtual net metering, and inclusive financing models, and 'environmental sustainability' – promoting eco-friendly technologies such as solar panel recycling, land-neutral solar deployment, and hybrid clean energy models, are the last two categories. The challenge welcomes a wide range of startups in green tech, IoT, AI, blockchain, construction, energy hardware, fintech, and waste management.

The Print

19 minutes ago

• The Print

Gold declines Rs 600 to Rs 99,960/10 g; silver plunges Rs 2,000/kg

Gold of 99.5 per cent purity dipped Rs 550 to Rs 99,250 per 10 grams (inclusive of all taxes). The yellow metal had closed at Rs 99,800 per 10 grams on Thursday. The precious metal of 99.9 per cent purity had settled at Rs 1,00,560 per 10 grams in the previous market session. New Delhi, Jun 20 (PTI) Gold prices slipped below the Rs 1 lakh-mark, falling Rs 600 to Rs 99,960 per 10 grams in the national capital on Friday due to selling by jewellers and stockists in line with weak global cues, according to the All India Sarafa Association. Silver prices also diminished Rs 2,000 to Rs 1,05,200 per kilogram (inclusive of all taxes) on Friday. It had ended at Rs 1,07,200 per kg on Thursday. 'Silver slid from recent highs, nearing one-week lows and heading for their first weekly decline in three weeks. It fell below USD 35.70 per ounce after a sharp rally earlier in the week. 'The decline came as investors liquidated positions in bullion to cover losses elsewhere amid rising geopolitical tensions between Israel and Iran,' Rahul Kalantri, Vice-President, Commodities at Mehta Equities, said. The Bank of England on Thursday also held rates steady in its monetary policy meetings, which also limited gains of precious metals. However, intensifying conflict between Israel and Iran, and weakness in the rupee is also supporting prices of gold and silver in the domestic markets, Kalantri said. On the global market, spot gold was trading at USD 3,353.67, lower by USD 16.72 per ounce, or 0.5 per cent. Spot silver fell 0.77 per cent to USD 36.10 per ounce in the overseas markets. 'Traders will watch developments on US trade tariffs and Middle East military engagement will drive volatility. Any signs of de-escalation or non-involvement from the US in the Iran-Israel conflict could keep gold under pressure. 'On the other side, renewed tensions will continue to support prices,' Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said. PTI HG HG TRB BAL This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.

Business Standard

24 minutes ago

• Business Standard

Genpact's 10-hour workday sparks employee outrage, online backlash grows

In the middle of ongoing global debates around work-life balance, Genpact, a major player in the technology and services sector, finds itself at the centre of a storm. The company has introduced a controversial new policy mandating a 10-hour workday, which officially came into effect in mid-June. But what has truly sparked uproar is not just the extended hours — it's the lack of clarity, communication, and any meaningful increase in base pay. According to a report by The Hindu, Genpact's internal system will now track employees' daily active hours through a proprietary productivity portal. Those who meet the 10-hour threshold can earn up to 500 points a month, translating to Rs 3,000 in incentives. However, for any time logged beyond the mandatory 10 hours, employees are rewarded with only a marginal 5 per cent bonus — about Rs 150. There is no revision in base salary despite the extended hours. The policy has caused widespread unrest, particularly in the company's Hyderabad office, where the atmosphere is reportedly 'tense' and morale is taking a hit. The bigger issue, employees say, lies in how the new rules were communicated or rather, weren't. 'There's nothing on paper. It's all word of mouth. If anyone challenges it, they're accused of being difficult and risk termination,' said a senior recruitment staff member to The Hindu. The absence of an official HR circular has only deepened the confusion, with managers and team leads passing on the policy informally. The backlash has spilled over onto social media. Employees have taken to social media platforms to express concerns about the long-term effects of such a policy on mental health and workplace culture. Abhishek Sharma, assistant manager at Genpact, voiced his opinion in a widely shared post: '#For10HrLogin – Is this the new standard or a step backward? As professionals striving for excellence, we're no strangers to going the extra mile. But mandating a 10-hour login raises some important questions about work-life balance, productivity, and mental health… Extended login hours can lead to burnout, reduced creativity, and disengagement. I urge leadership to reconsider – is this sustainable, and is it truly what drives growth?' Others have echoed this frustration online. On X, a user wrote: 'Wow @Genpact really said, 'Forget a life outside work!' With 70 per cent of employees earning under 10Lakh/year, they've now blessed you with a 10-hour workday. Add Bangalore's 3-4 hour traffic jam, and poof—14 hours of your day gone! Marriage? Kids? Nah, Genpact's your soulmate now.' The criticism hasn't stopped there. On Reddit, a user called the move 'absolutely pathetic' and pointed out that, 'the company increased working hours to 10, without increasing salary.' The same user added that employees must now meet 'WAM' — a tool that reportedly tracks keystrokes and activity in detail.