Nykaa - Valuation Turning Palatable: ICICI Securities
We had always liked FSN E-Commerce Ventures' (Nykaa) business model.
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ICICI Securities Report
We had always liked FSN E-Commerce Ventures Ltd.'s (Nykaa) business model. That said, post its listing on the Indian bourses, we've been staying on the sidelines due to valuations beyond our ability to comprehend (at peak stock price, revenue compound annual growth rate requirement over the next 20 years was 23%).
Post ~70% correction from peak, in SoTP, beauty and personal care business now accounts for ~77% of current price, assuming it's a defensible and high-growth business in medium term.
Reverse discounted cash flow shows 15% revenue CAGR requirement at 20% Ebitda margin. We ascribe Rs 100/share for BPC business. We believe cyclical slowdown in BPC and fashion businesses is somewhat priced in.
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