Shares of FSN E-Commerce Ventures, the parent company of Nykaa, rose as much as 3.6 percent on Wednesday on the BSE. Brokerage firm Citigroup India had earlier in the week initiated coverage on shares Nykaa, with a “buy” rating while Hiren Ved, CEO, Alchemy Capital Management believes amongst all the new-age listed companies, Nykaa has the best business model.
Shares of FSN E-Commerce Ventures, the parent company of Nykaa, rose as much as 3.6 percent on Wednesday on the BSE. At 11:15 am, Nykaa stock was trading at Rs 1,459.30, up 36.45 points or 2.56 percent higher.
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Brokerage firm Citigroup India had earlier in the week initiated coverage on shares Nykaa, with a “buy” rating and a price target of Rs 1,620, implying a 16 percent upside from the current level.
That said, the brokerage's target price is far below the stock's 52-week high of Rs 2,574. While Nykaa shares have recovered some in the past five days, it is still trading at almost a 40 percent discount to its listing price.
However, Hiren Ved, CEO, Alchemy Capital Management believes amongst all the new-age companies, many of them that got listed, Nykaa has the best business model.
"I think, Nykaa will probably do very well over the next few years, they already have a very profitable model. I think the others are still a work in progress. So there may be a few set of investors who are willing to take a very long-term view, might do that," said Ved.
Many experts have questioned the valuations demanded by new age or platform companies, which have gradually lost investors' interest.
Ved also added that the new age has gone to the stone age right now. "Many of these companies have realized that it is very different when you do your series A, B, C funding, and it's a very different market when you come and face retail investors and institutional investors once you are listed."
"But I think that today, there are better opportunities that investors have, and investors have to still understand and those founders have to probably do much harder work to explain to investors, what is it that they're doing in terms of their capital allocation and profitability."
"As I've mentioned, in the past, some of them have really built a great business, the valuations were questionable, and that's unravelling now and investors today have a choice - in the broader markets, there are many stocks that have corrected from 15 to 40 percent for investors to go ahead and buy," Ved said.
First Published: Mar 16, 2022 11:55 AM IST
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