Nykaa Gets ‘Underperform’ From Credit Suisse On Stock Pricing In ‘Too Much Optimism’


The stock, Credit Suisse said, is pricing in too much optimism, trading at nine times enterprise value to FY24 sales—much higher than established retail players such as DMart (5.2 times) and Titan (6.6 times)—”providing no headroom for likely challenges ahead, particularly in fashion”.

Credit Suisse set a target price of Rs 1,100 on Nykaa’s stock, implying a valuation of five times EV to FY24 sales, which, it said, is “fair”. The target price implies a potential downside of more than 23%.

The research firm also listed certain key risks to its thesis:

  • Strong success in fashion.

  • Continued share gain in beauty and personal care business.

  • Decline in India risk-free rate.

Shares of the company fell as much as 2.9% to Rs 1,411.1 apiece. Of the 16 analysts tracking the company, 10 maintain a ‘buy’, four suggest a ‘hold’, and two recommend a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 13.7%.


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