Nykaa shares: Morgan Stanley expects strong Q2 show; stock jumps 7%

Morgan Stanley expects FSN E-Commerce Ventures Ltd, the parent company of Nykaa, to report strong growth in the second quarter (Q2 FY27), with consolidated revenue likely to grow in the high 20 per cent range year-on-year (YoY), above its estimate of 26 per cent.

The foreign brokerage expects beauty segment revenue to grow in the high 20 per cent range YoY, compared with its estimate of 25 per cent and 27 per cent growth in each of the previous three quarters.

Fashion net revenue is expected to accelerate further to the low 50 per cent range YoY, compared with Morgan Stanley's estimate of 35 per cent and 48 per cent growth in the first quarter of FY27.

"Some of the festive-led growth has shifted from Q2 to Q3. Management remains confident in underlying growth drivers of the business," the brokerage said.

The company expects consolidated GMV (Gross Merchandise Value) and NSV (Net Sales Value) growth in the low 30 per cent range YoY.

In beauty and personal Care (BPC), NSV and net revenue growth are seen in the high 20 per cent range YoY, led by new customer acquisitions and repeat customer engagement.

Offline channel (like-for-like) growth was in the low 20 per cent range, the highest in the past six quarters.

House of Nykaa continued to grow ahead of the overall beauty vertical, led by its core and emerging brands, Morgan Stanley said.

In Fashion, the company expects NSV growth in the high 40 per cent range and net revenue growth in the low 50 per cent range. More than 250 new brands were added to the platform in the second quarter, while the Nike partnership continued to see encouraging early traction, supported by exclusive drops.

Morgan Stanley has assigned an 'Overweight' rating to Nykaa with a target price of Rs 356.

Separately, JM Financial said, "With both businesses (beauty and fashion) continuing to scale well, we expect operating leverage to remain favourable, supporting another quarter of healthy earnings delivery. We maintain our estimates but roll-forward to Sep'27E for a revised target price of Rs 405 (earlier Rs 395); maintain BUY."

Meanwhile, Nykaa shares surged 6.55 per cent in Monday's trade to hit a high of Rs 344.40.