Recently, the share price of Nykaa, an online beauty product company listed in the stock market, has increased more than double its issue price. The shares of Nykaa were listed at Rs 1125 but now they have increased to Rs 2390. The question is whether this boom is real. Should I invest in this stock or wait for its correction?
What are HSBC analysts saying?
Analysts at HSBC say that the stock of Nykaa may rise by another 20 per cent from its current level. It has said in its note that Nykaa is already a profitable online company. In the next decade, it can completely dominate the online beauty product market. Its share can be bought with a target price of Rs 2900.
Nykaa’s revenue could double in 2-3 years
According to HSBC, Nykaa is a platform business in which 2.30 crore users are registered and it has 85 lakh unique users. It says that this company is looking very good in terms of strong, sustainable growth and marginal returns. The rate of marginal return on the company’s own capital ranges from 70 to 100 percent. The company’s BPC category is showing a growth of 11 percent. This could increase to 13 per cent in the next decade. Growth can increase up to 30 percent in the online BPC product market. Analysts at HSBC expect the company’s revenue to double in the next 2-3 years.
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Where can the target price go?
Talking about the company’s ability, it said that over the past decade, it has proved that it can do well in this highly competitive market with online giants like Amazon and Flipkart. HSBC believes that the valuation of the company is correct. It can go further from here as e-commerce will go a long way in the beauty and personal care market in India. Therefore, its target price can go up to Rs 3690.
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