Nykaa shares fell 4% after strong Q1 results; brokerages raised target prices and viewed weakness as a near-term correction

Nykaa's shares dropped 4% on August 5 despite reporting strong Q1 results, including a consolidated net profit of ₹79.7 crore and a 29% revenue increase to ₹2,782 crore. Analysts noted that the company's EBITDA margins improved due to higher operating efficiency, with the beauty segment benefiting from premiumisation trends and strong demand across skincare and cosmetics.

The fashion business also performed well, indicating that investments in customer acquisition and supply-chain improvements are yielding results. Brokerages raised their target prices, maintaining a “Buy” rating, as they view the stock's recent decline as a near-term correction rather than a sign of weakening fundamentals.

Nykaa's acquisition of a 51% stake in Aminu Wellness aims to enhance its presence in the premium skincare segment, aligning with its strategy to expand its portfolio of high-growth beauty and wellness brands. Despite the stock's decline, analysts remain optimistic about Nykaa's leadership in India's online beauty market and its potential for sustained long-term growth.⁶

Investors will closely monitor Nykaa's ability to sustain revenue growth while further improving profitability, as the company continues to navigate the competitive landscape of the beauty and fashion sectors.