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Brokerage firm Macquarie has said it remains concerned about Nykaa’s ability to profitably grow in the fashion segment, where the company offers a curated marketplace of third-party/ newly developed own apparel brands.
“An analysis of offline retailers indicates that players using a curation-led approach with third-party brands have seen limited success,” Macquarie said in a report.
“With larger D2C brands increasingly looking to move offline and customers demanding more physical stores to experience products, we believe Nykaa would need to reinvest leverage gains to sustain growth,” it added.
Also read: Nykaa Q3 profit falls 71%
The brokerage firm has initiated coverage on the stock with an ‘underperform’ rating at a target price of Rs 115 per share, implying a downside of 23 per cent from current levels. Macquarie’s target price for Nykaa is the lowest among brokerages covering the stock. Nykaa shares were trading down 1.4 per cent at Rs 147 on Monday at 12.05 pm on the BSE.
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