Target: ₹210
CMP: ₹189.20
FSN E-Commerce Ventures’ (Nykaa) Q1 was in line, as BPC GMV grew a healthy 27.7 per cent y-o-y. As per our assessment, this was also helped by consolidation of the e B2B business/man segment, without which core BPC GMV (ex of eB2B) may have grown 19-20 per cent y-o-y.
The management is confident of accelerating growth going ahead, helped by the festive season. This means revenue growth momentum for the consolidated BPC business may sustain towards 30-32 per cent y-o-y in the near-to-medium term. The fashion segment reported muted growth (21 per cent GMV growth), largely on the back of a subdued wedding season, which too may accelerate going ahead. Categories such as hair care and skin care continue to see strong growth within BPC.
We believe consolidation of Nykaa Man and the eB2B business in Nykaa BPC will positively impact revenue growth for the BPC business by 7-8 per cent. However, at an absolute EBITDA level, this impact could be offset by lower margins (losses in eB2B). Nykaa’s BPC segment (including eB2B) is trading at fair valuations of 51x/37x basis FY26/FY27 EV/EBITDA.
We assume a margin expansion of 220bps in the next two years for the consolidated BPC business after factoring in better ad revenue growth and lower losses in the eB2B business. And we roll over to Dec’25with raised SoTP-TP of ₹210 (from ₹195).