Nykaa back in the green zone; stock jumps 4% today

Shares of Nykaa (listed as FSN E-Commerce Ventures Limited) jumped 4.5 per cent to hit an intraday high of Rs 1,392 on BSE after the company said that its litigation with L'Oreal S.A. has been settled.
 
"In the course of Initial Public Offering by the company, the details of the pending litigation (civil proceeding) with L'Oreal S.A. were disclosed in the Prospectus dated November 02, 2021. The company hereby informs that the aforesaid litigation with L'Oreal S.A. has been settled," Nykaa said in its regulatory filing.
 
The stock crashed 8 per cent to hit an all-time low of Rs 1,218.8 on BSE amid brutal market sell-off on Tuesday. At 11:05 hours, the shares were trading 3.18 per cent higher at Rs 1,374.35 on BSE. The market cap of the firm rose to Rs 65,126.86.
 
Sharing his views on new age Internet companies, Ashis Sarangi, SEBI Registered Investment Advisor at Pickright Technologies said, "At the current values, only investors with a high-risk appetite can dedicate a portion of their portfolio (2 per cent – 4 per cent) to these companies as there are many alternative stock ideas available now on a better risk-reward basis."
 
FSN E-Commerce Ventures, the parent company of online beauty e-commerce platform Nykaa, reported a 58 per cent year-on-year (YoY) decline in its consolidated net profit for October-December at Rs 29 crore. Its net profit stood at Rs 1.2 crore in the preceding September quarter.
 
However, revenue from operations grew 36 per cent YoY and 24 per cent quarter-on-quarter (QoQ) to Rs 1,098.4 crore from Rs 808 crore in the October-December quarter of 2021.
 
"Influencer marketing and the digital market are the two main drivers of sales for the firm. Because of a 155 per cent year-over-year increase in marketing expenses, the margin has been severely damaged," Sarangi told BusinessToday.In.

"This spending has resulted in a 49 per cent increase in revenues and a 44 per cent increase in transactions. Investors seeking a new entry point should hold off for a while longer, as there are many better equities available now on a risk-reward basis. Existing investors can keep their positions and wait for the price to average out," he added.
 
Nykaa shares got listed at a premium of 79 per cent to the issue price, marking a strong listing for the online beauty retailer. The company made its market debut at Rs 2,001 per share on the BSE against the IPO issue price of Rs 1,125.