Nykaa shares hit fresh all-time low, test Rs 120 level; should you buy, sell or hold?

Shares of FSN E-Commerce Ventures, Nykaa's parent, fell 5.11 per cent in Monday's trade to hit their fresh one-year low. The stock today slipped to a 52-week low of Rs 120.75 over its previous close of Rs 127.25. The scrip has been consistently hitting fresh lows, particularly on the back of bulk deals, marking the exit of large pre-IPO investors who offloaded their stake after the expiry of mandatory lock-in. On a yearly basis, Nykaa has plunged 57.42 per cent.

Around 11.08 lakh shares changed hands today on BSE, which was higher than Nykaa's two-week average volume of 9.03 lakh shares. Turnover on the counter stood at Rs 13.60 crore, commanding a market capitalisation (m-cap) of Rs 35,189.75 crore.

There were 2,87,600 sell orders on BSE, against buy orders of 2,65,721 shares. Analysts largely suggested that the counter looked 'oversold'.

"Don't buy anything new. If you've previously bought it (Nykaa stock), then hold on to it, but stay away from fresh buying," said AK Prabhakar, Head of Capital, IDBI Capital.

"Since last year, Nykaa has been making lower high and lower lows structures, resulting in a 71 per cent cut in stock price. The said counter is trading below all Daily Exponential Moving Averages (12-26-50-100-200 DEMA). At extreme levels, it is trading near its crucial support zone of Rs 120-125. Fresh buying is not advised, let the counter make a solid base near Rs 125-130. As of now wait and watch," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

"Nykaa continued its downward spiral and a daily close below Rs 123 could trigger a further fall till Rs 107 level, despite the stock price being oversold. Strong resistance will be at Rs 133," said AR Ramachandran from Tips2trades.

The counter's 14-day relative strength index (RSI) came at 20.36. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 429.83.

The stock was last seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. Nykaa has an average target price of Rs 145, Trendlyne data showed, suggesting a potential upside of 17.41 per cent. The stock has a one-year beta of 0.98, indicating average volatility.

On the earnings front, Nykaa may report revenue growth of 39 per cent (YoY) in the December quarter, Kotak Institutional Equities said in a preview note. The growth could be led by flagship sales, festive season and continued growth in beauty & personal care (35 per cent YoY) and fashion business (27 per cent YoY), the brokerage said in a note.

JM Financial also felt that the December quarter growth for Nykaa will be led by the festive demand during the holiday season, penetration in new channels and newer initiatives (eB2B superstore).

ICICI Securities has reduced Nykaa's target price to Rs 145 from Rs 175 earlier. New-age internet companies have corrected significantly amid intense selling pressure and global headwinds.

Meanwhile, Indian equity benchmarks rose sharply in late-morning deals, led by gains in banks, financials and automobile stocks.

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