Shares of FSN E-Commerce Ventures Ltd, the parent company of beauty and fashion retailer Nykaa, experienced a significant rally on Monday, climbing over 6% in early trade. The surge came after global brokerage firm Morgan Stanley issued an 'Overweight' rating for the stock, citing expectations of a strong performance in the second quarter of fiscal year 2027 (Q2 FY27).
Morgan Stanley projects Nykaa's consolidated revenue to grow in the high 20 per cent range year-on-year, surpassing its own estimate of 26 per cent. This optimistic outlook is driven by anticipated robust expansion across its core business segments.
Beauty and Personal Care (BPC) Segment Outlook
The brokerage expects the beauty and personal care segment, Nykaa's primary revenue driver, to see revenue growth in the high 20 per cent range year-on-year. This forecast is an improvement over the 25 per cent and 27 per cent growth recorded in the preceding three quarters. Key factors contributing to this growth include continued new customer acquisitions and enhanced engagement from existing repeat customers. The offline channel, on a like-for-like basis, also demonstrated strong momentum, achieving low 20 per cent growth, marking its highest in the past six quarters. Furthermore, Morgan Stanley noted that Nykaa's in-house brands, under 'House of Nykaa', continue to outpace the overall beauty vertical's growth.
Fashion Segment Accelerates
Nykaa's fashion vertical is also poised for accelerated growth, with Morgan Stanley forecasting net revenue to increase in the low 50 per cent range year-on-year. This is a significant jump compared to the brokerage's prior estimate of 35 per cent and the 48 per cent growth seen in Q1 FY27. The company expanded its platform by adding over 250 new brands during Q2, and its partnership with Nike has shown encouraging early traction, bolstered by exclusive product drops.
Despite some festive-led growth shifting from Q2 to Q3, Nykaa's management remains confident in the underlying growth drivers of the business. The company anticipates consolidated Gross Merchandise Value (GMV) and Net Sales Value (NSV) growth in the low 30 per cent range year-on-year.
Morgan Stanley has set a target price of Rs 356 for Nykaa shares, reinforcing its 'Overweight' recommendation. Following the report, Nykaa's stock climbed 6.11 per cent to hit a high of Rs 342.95 in Monday's trading session.