Nomura expects FSN E-Commerce Ventures (Nykaa) to report stronger revenue growth in the June quarter, driven by sustained momentum in its beauty business and a sharp acceleration in fashion sales.
The brokerage reiterated its 'Buy' rating on the stock with a target price of Rs 317.
According to Nomura, Nykaa expects net sales value (NSV) and net revenue growth in its Beauty & Personal Care (BPC) business to come in "in the high 20s" during Q1FY27, broadly in line with the previous quarter. The brokerage estimates BPC NSV and revenue growth of around 29% and 27%, respectively.
The company continued to expand its omnichannel presence, adding 11 stores during the quarter to take its total store count to 324. Nomura said the omnichannel beauty business "continued to see accelerated growth," while retail performance strengthened further with mid-teens like-for-like growth.
The fashion business is expected to be the standout performer. Nykaa guided for NSV growth in the mid-50s and net revenue growth "to near the fifties," supported by an expanding brand portfolio, higher marketing investments and lower leakages between gross merchandise value and net sales value.
Nomura estimates fashion NSV and revenue growth of around 55% and 50%, respectively, a sharp improvement from 42% and 40% in the March quarter. It also noted that the company's partnership with Nike has delivered "encouraging early results."
Overall, the brokerage expects consolidated revenue to grow around 30% year-on-year in Q1FY27, slightly ahead of its earlier estimate of 29%, with EBITDA margin improving to 8.5%, up 170 basis points year-on-year.
Nomura said sustained revenue momentum could create upside to its FY27 and FY28 forecasts and added, "We don't expect much impact of inflation on demand." It believes continued margin expansion "will be the key catalyst" for the stock, which it says trades at an attractive valuation.