Mumbai, India – Despite a recent surge that has made India's new-age internet stocks appear richly valued, Mayuresh Joshi, Head of Equity Research at William O’Neil India, maintains a bullish long-term outlook on select players like Fsn E-Commerce Ventures Ltd (Nykaa) and Lenskart Solutions Ltd. Joshi emphasizes that while the near-term pricing of the broader internet sector is high, these specific companies present compelling long-term investment opportunities.
Why Nykaa and Lenskart Stand Out
Joshi points to several key factors that differentiate Nykaa and Lenskart from the wider internet pack. Their strong earnings profiles, significant potential for scale, and expanding digital footprints are primary drivers. He highlights the impressive financial numbers these companies have recently posted and the substantial Total Addressable Market (TAM) they operate within as crucial reasons for their continued appeal, even with elevated valuations.
According to Joshi, these companies are well-positioned to capture a "lion's share" of the evolving Indian consumption landscape over the next decade. As India's demographic shifts deepen the market for digital-first brands, he anticipates a handful of these companies will grow significantly larger.
Operating Leverage and Market Shift
A central tenet of Joshi's investment thesis for Nykaa and Lenskart is their ability to leverage operating costs. As these businesses deepen their digital penetration, operating expenses are expected to remain relatively contained, allowing earnings growth to outpace revenue expansion over time. This focus on profitability is a critical distinction in a market that has become increasingly selective, moving beyond mere growth at any cost to demand clear pathways to healthy margins.
The market is now actively backing internet businesses that can effectively convert their broad reach into sustainable profitability, a characteristic Joshi believes Nykaa and Lenskart possess.
Analyst's Price Targets
Reflecting this selective optimism, Joshi has set price targets of 710 for Lenskart and approximately 350 for Nykaa. His stance underscores the current balancing act in the internet investment theme: while valuations appear expensive on conventional metrics, category leaders with strong growth prospects, profitability potential, and large addressable markets continue to attract a premium.
This approach aligns with Joshi's broader investment philosophy, which consistently prioritizes earnings potential over simple market capitalization labels, particularly in a dynamic sector like internet commerce.