Nykaa Stock Makes Blockbuster Debut – Should You Buy, Sell or Hold Nykaa Stock?

On its listing day on 10th Nov 2021, the Nykaa Stock made a blockbuster debut at Rs. 2,001, compared to its issue price of Rs 1,125 on BSE, a premium of over 78%. On the first day of the listing, the Nykaa Stock managed to touch an intraday high of Rs 2,248.10, which is 99.8 percent jump over its issue price. At the end of the day, Nykaa stock settled settled at Rs 2,206.70, up by Rs 1,081.70, or 96.15 percent.

With its stellar debut on the bourses, the Nykaa stock not only multiplied the promoter’s wealth by a huge margin but also managed to double the wealth of investors. In terms of market capitalization the Nykaa stock entered the Rs 1 lakh crore on its first day of listing. At the first day’s high, Nykaa’s market cap touched Rs 1,06,318 crore.

Nykaa was founded in the year 2012 by Falguni Nayar, a former investment banker in her late 40s. The company was setup at a time when most beauty products were usually bought off the shelf at retail outlets and stores. Over the past 9 years, Nykaa has become a major player in the online beauty retail space. The company operates over 80 brick and mortar stores in 40 cities across India.

With this huge capital appreciation in a short time, many investors are asking the same question about Nykaa stock;

Is it the time to buy, sell or hold Nykaa stock?

Here are few factors to consider which can help you take an informed decision:

• Compared to other unicorns in India, Nykaa is a profitable venture. The company’s FY 2021 revenue from operations was Rs 2,440.89 crore. Its stated profit for the FY 2021 was Rs 61.94 crore.
• Nykaa is a new-age business with first-mover advantage in the online beauty retail space.
• Nykaa’s business model is highly scalable as India’s beauty and personal care market is grossly underpenetrated currently. It is expected to grow to Rs. 2 lakh crore by the year 2025 from Rs. 1.1 lakh crore in 2021.
• High speed internet connection with widespread smart phone penetration in the country has opened up India’s online shopping market. This offers a goldmine of opportunity for e-commerce ventures like Nykaa.

Most experts are bullish on the future prospects of Nykaa stock. Given the significant run up in the Nykaa stock, it would be advisable to enter the stock after some correction. If you are too tempted to invest in the Nykaa stock at current levels keep the below wise quote by legendary investor Warren Buffett in mind.

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price”.

To read about lessons for investors from Paytm’s IPO Debut click here.

– Written and contributed by Pradeep Sukumaran.