The JM Financial broker company has initiated coverage in the FSN e-commerce business, known as Nykaa, with a “buy” rating and the target price of Rs 2,480.

This shows a 24 percent increase from the current level of Rs 1.999 in BSE.

The e-commerce beauty and private care (BPC) platform has been registered at Rs 2,018 on November 10, 80 percent premium for the price of the problem of Rs 1,125. However, it is currently trading under the listing price after market Rout recently affected investor sentiment and the locked anchors opened on December 8.

JM Financial, however, is bullish on the company’s growth prospects and expects Nykaa to continue to strengthen its market leadership at BPC while increasing market share in a larger mode segment.

“We are very happy with the Omni Aggressive Channel Strategy that will give touch and feel experience with the acquisition of organic customers. We believe Nykaa has built a long-lasting ditch with being a reliable partner for brands and buyers,” said Broker in Note on December 21 .

It expects 38% / 86% CAGR to Nykaa in the value of BPC / Gross Merchandise mode value through FY21-26, and the EBITDA margin reaches 15.4 percent (7.6 percent as percent of GMV) in FY26.

In FY21, the company produces 4.8 percent of the total GMV in advertising income and EBITDA margins 6.6 percent.

“Our exclusive analysis of NYKAA customer involvement metrics and BPC / fashion brand advertising trends show that it is likely to be the preferred ROI advertising platform for the brand partner which will allow the expansion of a strong margin,” said the broker.

It is hoped that the increase in digital penetration, disposable income, and greater awareness through social media to encourage rapid growth in the BPC space, which leads to CAGR 17 percent to Rs 10.6 trillion by FY26, thus doubling the NYKAA market that can be addressed.

However, it is said that the risk of decreasing the target includes the company’s failure to improve the fashion business, dilution of margins due to expansion at lower premature and expenditure costs, and a sharp increase in competitive intensity.

Recently, the broker initiated coverage in other registered platform stocks, including Zomato, PB Fintech and Paytm. Although it has not set recommendations for PaytM, it has a “buy” rating on Zomato and “Hold” in PB Fintech.

The four shares have seen a journey that easily evaporates since their list, with them all except Zomato Trading under their current problem prices.

At 10:16 hours, Nykaa traded 1.6 percent higher than the previous lid at Rs 1,999.75 on BSE.