Shares of Nykaa’s parent FSN E-Commerce Ventures on Tuesday tumbled more than 9 per cent, snapping their three-session winning run. The stock plunged 9.64 per cent to hit an intraday low of Rs 191.15.
Considering the day’s low levels, the shares traded 18 per cent higher from their October low of Rs 162.91. Yet, the stock traded 55 per cent lower from its 52-week high of Rs 429.86, hit in November last year. (It must be noted that the share prices are adjusted after bonus issuance.)
The lifestyle retailer’s stock edged 0.19 per cent lower over the past month. On a year-to-date (YTD) basis, it plunged 44 per cent.
A total of 11.02 lakh shares exchanged hands today on BSE amounting to a turnover of Rs 22.04 crore.
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Prashanth Tapse, Research Analyst, Senior VP (Research) at Mehta Equities, said, “The fall can be attributed to issue of bonus shares and the timing, which is hurting retail investors a lot due to short-term and long-term tax liabilities arising out of the bonus issue. Investors are also raising questions about corporate governance when it comes to shareholders’ concerns post-IPO and bonus issuance. We remain neutral on the recent development and conservative investors should avoid this counter.”
Shares of Nykaa went ex-bonus in a 5:1 ratio on November 10. Shareholders got five bonus shares for every single share held.
Pavitraa Shetty from Tips2trades, said, “After a strong recovery from its 52-week lows, Nykaa stock again finds strong selling today indicative of uncertainty amongst retail investors to stay invested in the stock from a long-term perspective. Rs 212-216 remains a major resistance. Investors should buy only if it closes above Rs 216 or on a further dip near Rs 165-168 in the near term.”
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking Ltd, said, “Prices are at extremely oversold conditions in the daily time frame. A relief rally or a consolidation can be seen before swaggering back to its negative momentum. The entire up move of the last few days is well-channeled, with immediate resistance seen around Rs 250. The recent rally of more than 20 per cent can be temporary in nature until and unless it surpasses the said resistance point. However, its inability to surpass Rs 250 would continue to maintain a negative bias and chances remain high of a downside rally towards Rs 150-165.”
Rajesh Sinha, Senior Research Analyst, Bonanza Portfolio Ltd, said, “The stock price of Nykaa has corrected by over 50 per cent in the past one year. The recent fall was majorly due to heavy sell-off from anchor investors exiting and uncertainty in terms of financial performance of the new-age start-ups. With a higher share of private labels, rising marketing support revenue and lower fulfillment costs, we believe, Nykaa’s operating efficiency in Beauty and Personal Care (BPC) is expected to continue going ahead as well. We advise investors may consider any dip in the stock price to invest for a long-term perspective.”
Also, market veteran Shyam Sekhar termed Nykaa’s decision to declare bonus shares as “a bit odd” and raised doubts about the intent of the company board.
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Meanwhile, Indian equity benchmarks traded flat during late deals today.
