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Investing.com - UBS downgraded FSN Ecommerce Ventures (NYKAA:IN) from Buy to Neutral while maintaining its price target of INR260.00, citing slower-than-expected margin improvement in the company’s beauty and personal care (BPC) segment.
The investment bank expects Nykaa’s Q2FY26 performance to follow a similar pattern as Q1, with both GMV and revenue growth for the BPC segment estimated at 26% year-over-year, while EBITDA margins as a percentage of NSV are projected to improve by 50 basis points year-over-year due to operating leverage.
For the fashion segment, UBS forecasts GMV growth of 21% and revenue growth of 11% year-over-year, with cash burn continuing to decline quarter-over-quarter as guided by management.
UBS has reduced its medium-term EBITDA estimates for Nykaa by 3-6% due to slower-than-anticipated margin improvement in the BPC segment.
Based on the revised estimates, Nykaa stock is trading at FY27e and FY28e EV/EBITDA multiples of 61x and 41x respectively, which UBS considers fair valuation.
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