Shares of Nykaa (listed as FSN E-Commerce Ventures Limited) were trading higher today a day after hitting their 52-week low. The stock of the fashion retailer gained up to 2.63 per cent to Rs 1182.3 against the previous close of Rs 1151.95 on BSE. Nykaa stock was trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The stock has lost 44.47 in 2022 and fallen 12 per cent in a month. Market cap of the firm rose to Rs 55,337 crore.
Total 0.28 lakh shares of the firm changed hands amounting to a turnover of Rs 3.29 crore. Nykaa stock has gained today amid a weak and a volatile market.
At 12:21 pm, Sensex was trading 96 points lower at 59,010 and Nifty lost 17 points to 17,495. Despite a relief rally today, the stock is trading merely 3 per cent higher than the 52-week low of Rs 1,130. The stock fell 1.24 per cent to hit a 52-week low of Rs 1,130 on BSE on October 19 yesterday.
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Is the relief rally temporary or the stock has really bottomed out? Here’s a look at what experts said.
Abhijeet from Tips2trade said, “2022 has been an expectedly bad year for IPOs listed at obscene valuations in 2020 and 2021 due to a bearish global sentiment coupled with disappointing financial performances. Among the new-age startups, Nykaa has at least shown profits and a vision to further improve profitability in the coming years. Technically, Nykaa is quite oversold on the daily charts. Investors should buy only if daily close is above Rs 1,186 for the near-term targets of Rs 1248- Rs 1290 in the near term.”
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Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking said, “Consecutive lower low formation in both weekly and daily time frame indicates that the trend in the stock has been methodically negative. However, amid such negativity prices are at an extreme oversold conditions in daily time frame. Hence, a relief rally or a consolidation in prices can be seen amid 1220-1130 before swaggering back to its negative momentum. Outlook in the stock is likely to remain negative until and unless it trades above the recent swing high of 1,350 which seems to have a feeble chance. Hence, ideal approach should be to sell on rise as fresh sell crossover is seen MACD in weekly time frame as well. Lower target from 150% & 161.8% projected retracement comes around 1065 and 950 respectively.”
JM Financial has a ‘BUY’ rating on the stock with a September 2023 target of Rs 1,780. It believes any short-term dip should be a great accumulation opportunity for investors looking to build long-term positions in Nykaa.
“The stock has valuations at a premium to most loss-making new age companies. But it expects the Nykaa premium to sustain, as not many companies are estimated to deliver gross merchandise value CAGR of 41 per cent, revenue CAGR of 39 per cent and EBITDA CAGR of 71 per cent over FY22-27 period,” said JM Financial.
CAGR stands for compounded annual growth rate.
The stock made a strong market debut on October 11, 2021. It listed at a premium of 79% to the issue price. The subsidiary of FSN E-Commerce Ventures Ltd debuted at Rs 2,001 per share on the BSE against the IPO issue price of Rs 1,125. Price band of the IPO was fixed at Rs 1,085-1,125 per share.
