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Nykaa stock climbs over 5% post Q4 earnings, what should investors do?

Nykaa stock climbs over 5% post Q4 earnings, what should investors do?

Nykaa shares gained 5.41 percent intraday to Rs 1425 on BSE today. Earlier, the stock opened lower at Rs 1337 against the previous close of Rs 1351.80.

Nykaa stock is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Nykaa stock is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

Shares of Nykaa (listed as FSN E-Commerce Ventures Limited) rose over 5 per cent in early trade despite the fashion retailer reporting a 49 per cent decline in consolidated net profit for the fourth quarter ended March 31, 2022. The share gained 5.41 percent intraday to Rs 1425 on BSE. Earlier, the stock opened lower at Rs 1337 against the previous close of Rs 1351.80. Market cap of the firm rose to Rs 65,793 crore on BSE.

Nykaa stock has risen after 5 days of consecutive fall. The share is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock has slipped 34.12 percent this year and fallen 18.21 percent in a month.

It touched a 52-week high of Rs 2,574 on November 26, 2021 and hit a 52-week low of Rs 1208 on BSE.

Total 0.31 lakh shares of the firm changed hands amounting to a turnover of Rs 4.33 crore. Market cap of the firm rose to Rs 65,772 crore.

Net profit almost halved to Rs 8.56 crore for the fourth quarter ended March 31, 2022 against a net profit of Rs 16.8 crore in the year-ago period.

Nykaa Q4 results: Net profit almost halves to Rs 8.56 cr, revenue up 31%

However, revenue from operations rose 31 per cent to Rs 973.32 crore in Q4 against Rs 740.52 crore in the same quarter last fiscal.

"Nykaa has experienced overall strong performance in FY2022 amidst various macro-economic challenges such as rising inflation, reduction in discretionary spends by consumers, and uncertainty around Covid-19," the company said in a regulatory filing.

Gross Merchandise Value (GMV) rose 45 per cent YoY to Rs 179.79 crore in the March quarter, while it increased 71 per cent Rs 693.32 crore in FY2022.

Total income also rose 32 per cent to Rs 984.45 crore year-on-year.

In the fiscal ended March 2022, the beauty firm's profit after tax stood at Rs 41.3 crore, a decline of 33 per cent from a year-ago period.

Moreover, the earnings before interest, taxes, depreciation, and amortization or EBITDA was Rs 163.3 crore in the fiscal year, up 4 per cent while the EBITDA margin of revenue from operations declined to 4.3 per cent in FY2022 vs 6.4 per cent in FY2021, owing to investment in fashion and other businesses for future growth, it added.

JM Financial Institutional Securities has given a buy call for the stock post Q4 earnings. However, it has lowered the target price for the firm. "We believe the investments in fulfilment capabilities, owned brands and brand building will drive strong operating leverage as the company gains further scale driven by 3,000/1,500 brand partnerships in BPC/Fashion. We retain 'BUY' rating with a June 2023 target price of Rs 1,730 (28% upside), 18.4% lower than our previous target price, largely driven by an increase in WACC to account for rise in risk-free rate and market volatility," the brokerage said.

ICICI Securities said Nykaa's Q4FY22 revenue performance was in line with their estimates. "We like the higher investments in growing new businesses with resilient BPC margins, " said ICICI Securities.

The brokerage has a hold call on the stock with a target price of Rs 1,351 post Q4 earnings.

"The competition will likely intensify from both vertical and horizontal peers. While we expect beauty and personal care (BPC) revenues to grow, we believe Nykaa's journey could be different - it will have to go more mainstream to drive this growth (tougher decisions about brand stretch along the way," the brokerage added.