Brokerage firm UBS on Friday, March 7, upgraded its rating on Nykaa and projected an 18.5% upside on the stock from its previous closing price.

The brokerage has upgraded the stock to a “buy” rating with a price target of ₹200 per share.

It said Nykaa’s beauty and personal care (BPC) segment performance continues to surprise positively. The BPC segment growth is improving and margins are holding up despite competitive pressures.

In the fashion segment, the company reduced its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) losses in the recent quarter, UBS said.

It added that the stock is trading 42 times its financial year 2027 Enterprise Value / EBITDA estimates compared to the consumer sector average of 25x. It sees the company’s revenue growing at a Compounded Annual Growth rate of 24% between financial year 2025-2028, compared to the sector average of 12%.

Of the 25 analysts that have coverage on the stock, 15 have a “buy” rating, three have a “hold” rating and seven have a “sell” rating.

Last month, Nykaa’s founder and CEO Falguni Nayar told CNBC-TV18 that the company’s digital business remains strong amid soft consumer sentiment, driven by customer acquisition efforts and the use of AI and machine learning for personalisation.

Nykaa’s physical store expansion is also progressing steadily, contributing to overall growth. Physical retail currently accounts for only 9% of the company’s omnichannel sales. “Beauty overall will grow a lot, and within that, e-commerce will grow, and so is the retail store environment. We are rolling out a number of stores,” she said.

Nykaa reported a 61% increase in its net profit at ₹26 crore in the December quarter from the last year’s ₹16 crore. Its revenue grew nearly 7% to ₹2,267 crore compared to ₹1,788.8 crore in the previous year. Its EBITDA jumped 43% to ₹141 crore compared to ₹98.7 crore in the same period a year ago. Nykaa’s margin expanded by 70 bps to 6.2% from the previous year’s 5.5%.

Nykaa shares were trading 1.2% lower at ₹166.73 apiece. The stock has declined 23.5% in the last six months.

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