India’s e-retail/e-commerce sector is set for explosive growth, projected to reach $120–$163 billion by FY26, driven by rising digital adoption and government support. With 300–350 million online shoppers expected by 2026, robust growth in digital payments and expansion beyond metros are fueling this rapid transformation of the retail landscape in India.
With a market capitalization of Rs 56,879.36 crore, the shares of FSN E-Commerce Ventures Ltd were trading at Rs 198.50 per share, decreasing around 2.58 percent as compared to the previous closing price of Rs 203.75 apiece.
FSN E-Commerce Ventures Ltd (Nykaa) trades at a steep P/E of 860, significantly above the industry average of 39.9, reflecting high investor expectations for future growth.
Despite the expensive valuation, analysts remain optimistic due to Nykaa’s strong brand equity, digital-first model, and leadership in beauty and personal care, indicating confidence in its long-term profitability and market expansion.
CLSA, one of the well-known brokerages globally, has given a ‘Outperform’ rating despite expensive valuation, on this retail stock with a target price of Rs 229 apiece, indicating a potential upside of 15 percent from Tuesday’s price of Rs 198 per share.
The brokerage highlighted Nykaa as India’s top omni-channel beauty retailer and a rising force in online fashion. With the beauty market expanding due to increasing incomes and aspirations, Nykaa is seen as well-placed to capitalize on these trends, reinforcing its growth potential and leadership in the evolving consumer landscape.
CLSA noted Nykaa’s strong leadership in the $16.5 billion beauty retail market, both online and offline, with GMV dominance and expected high-teens growth over five years.
However, it cautioned that Nykaa’s push into fashion remains challenging due to intense competition and a discount-driven environment, potentially impacting margins and scalability.
Further, despite rising competition from existing players such as Myntra, Shoppers Stop, and DMart, as well as newer entrants like Tira, CLSA believes Nykaa maintains a strong consumer connection through its app and stores, which also serve as key channels for beauty education among first-time users.
However, Nykaa’s expensive valuation, CLSA believes its post-listing underperformance is overdone, citing strong brand equity and leadership. The brokerage sees improving profitability as a key catalyst, projecting a 310 basis point EBITDA margin expansion between FY25 and FY28, which could restore investor confidence and drive long-term re-rating.
FSN E-Commerce Ventures Limited is a consumer technology platform company. The Company is engaged in the business of manufacturing, selling, and distributing beauty, wellness, fitness, personal care, health care, skin care, and hair care products.
Written by Abhishek Singh
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