Shares of FSN E-commerce, which operates under Nykaa brand, soared 6 per cent to Rs 1,350 on the BSE in Thursday’s intra-day trade. This comes after the company said its board will meet on October 3 to consider a maiden bonus issue.
Nykaa, said in a regulatory filing, “We wish to inform you that a meeting of the Board of Directors of the Company will be held on Monday, October 03, 2022, to, interalia, consider and approve the issuance of Bonus Shares to the equity shareholders of the Company in the ratio, as it may deem fit and seeking shareholders’ approval by way of postal ballot and such other approval(s), as the Board may deem appropriate.”
On 10 November 2021, it made clocked 79 percent premium on listing. The issue was priced at Rs 1085 – Rs 1125, while the listing price on NSE was Rs 2,018. However, the stock then took a beating when new-age tech shares went out of favour. It is down 44 per cent till date. Meanwhile, in the past three months, Nykaa has underperformed the market falling up to 7 per cent, as against a 7 per cent rally in the Sensex. In the past six months, the stock has slipped 17 per cent, as compared to 1 per cent decline in the benchmark index. The stock had hit a record high of Rs 2,574 on November 26, 2021. It touched a record low of Rs 1,208.40 on May 12, 2022.
While current inflationary pressures will affect consumer discretionary spends in the near term, medium-term and long-term growth of both beauty & personal care, as well as fashion, remains strong. With the increase in disposable income in younger consumers, and online content-led discovery, beauty & personal care, wellness and fashion consumption is seeing an increased share of the wallet, Nykaa said in its FY22 annual report.
In the first quarter of FY23, revenue stood at Rs 1,148.4 crore, a 41 per cent growth from the same period last year. While most new-age tech companies are reporting losses, Nykaa is one of the few profitable ones, recording Rs 5 crore profit in the June quarter.
Brokerage firm JM Financial has a buy rating on the stock with a September 2023 target of Rs 1,780. “The festive season having kicked off in earnest; we continue to believe that Nykaa is well positioned. The company continues to deliver topline growth, despite recent macro headwinds. Its customer base and target categories seem to be relatively resilient,” it said.
Nykaa is engaged in the business of manufacturing, selling & distribution of beauty, wellness, fitness, personal care, health care, skin care, hair care products on the online platforms or websites such as e-commerce, m-commerce, internet, intranet as well as through physical stores, stalls, general trade and modern trade etc.
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