Nykaa shares in focus: Shares of FSN E-Commerce Ventures, the parent of Nykaa recieved bullish calls from Nuvama Institutional Equities and Morgan Stanley as they reiterated a positive stance on the company, citing an ambitious growth roadmap through FY30 backed by profitability expansion and scale.
Both brokerages highlighted management’s long-term vision of building a significantly larger and more profitable beauty and lifestyle platform, with improving margins, stronger return ratios, and accelerated growth across verticals.
Created with AI. Errors are possibleNuvama Sees Scale-Led Profitability, Raises Target Price
Nuvama turned constructive following Nykaa’s recent analyst day, where the company laid out its FY30 strategy in detail. The brokerage noted that “management is targeting USD over 5 billion GMV by FY30E (growing 2.5 times) coupled with 4–5 times EBITDA scale-up,” pointing to a sharp improvement in operating leverage over the next few years.
This expansion is expected to translate into stronger margins, with Nuvama highlighting that the plan implies “EBITDA margin of early to mid-teens from current 7.7 per cent and over 40 per cent RoCE.”
The brokerage emphasised that growth will be broad-based but anchored in Nykaa’s core beauty and personal care segment. According to management projections, “BPC remains the core pillar, with management targeting 2.5–3 times GMV growth, a 100 million customer base (from 45 million) and double-digit EBITDA margin by FY30E.”
Beyond beauty, newer and emerging segments are expected to contribute meaningfully. Nuvama noted that “Fashion is expected to deliver 3–3.5 times growth in GMV,” while “Superstore is expected to surpass Rs 35 billion GMV by FY30 (3–4 times)” and “Nykaa Man” could clock “4–5 times” expansion.
The brokerage also drew attention to Nykaa’s offline push, saying the company “plans to expand its omni-channel footprint to 600+ beauty stores from 313 stores currently,” with Tier-II and Tier-III markets expected to drive incremental demand. Premiumisation remains a key margin lever. As per management, “premiumisation and wellness are expected to drive margin expansion,” with the wellness business projected to grow at “Over 50 per cent CAGR through FY31.”
On its in-house brands, Nuvama flagged significant upside, noting “House of Nykaa is expected to scale to over Rs 50 billion NSV by FY30,” supported by established labels and new brand incubation.
Technology is another area of focus. The brokerage highlighted that the company is “using AI-driven forecasting and fulfilment optimisation to improve delivery efficiency,” targeting “same and next day delivery for 90 per cent orders by FY30 (from the current 40–50 per cent).” Factoring in the upbeat outlook, Nuvama said it has “tweaked FY27 and FY28 EBITDA estimates by over 4.2 per cent and over 7.3 per cent,” while raising its target price to Rs 351 from Rs 321 earlier.
Morgan Stanley Upgrades Outlook
Morgan Stanley also maintained a bullish stance on Nykaa, reiterating its “Overweight” rating and raising its target price to Rs 321 from Rs 286, citing stronger-than-expected growth and margin guidance.
The global brokerage underscored the scale of ambition laid out by the company, noting that Nykaa is targeting consolidated GMV CAGR of 25–30 per cent for FY26–30, with beauty at 25–30 per cent and fashion at 30–35 per cent. Morgan Stanley highlighted that profitability is set to improve significantly alongside growth. Consolidated EBITDA margin is targeted to improve to early-mid teens by FY30 from 7.5 per cent in FY26 it said.
Segment-wise, the brokerage pointed to continued strength in beauty, noting that the beauty margin is targeted at healthy double digits by FY30 from 9.6% in FY26. Meanwhile, the fashion business is expected to stabilize, with a high single-digit margin after breaking even in Q4FY26. The firm also emphasized a sharp improvement in capital efficiency, stating that return on capital employed is targeted to improve to over 40 per cent by FY30 from 21 per cent in FY26.
Morgan Stanley noted that the company’s outlook appears stronger than what the market had previously built in. Guidance is ahead of consensus which had built in lower revenue growth and margin expansion assumptions, it said. Following the updated projections, the brokerage has raised FY27 and FY28 consolidated EBITDA estimates by 7 per cent and 11 per cent, respectively, reflecting confidence in execution and operating leverage.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
