@ChaitanyaC
Nykaa is a margin and a sales story. Mostly sales, cuz the management is focussed on sales growth and covering TAM as much as possible without taking on debt.
Threats should be considered when growth dips sharply. Or a competitor appears on the horizon. The way it’s growing, I doubt that’ll happen.
@Investor_No_1 has chosen to buy in a staggered manner. That is wise. Nykaa being a 5L Cr mcap in another decade is a strong possibility. And no one can know which will be the right time to buy.
Just like I believe, Dmart can be a 10L Cr mcap in the long term.
I have learned to pick growth stories, esp established ones. One might end up buying expensive, but that time will heal, since growth is on our side.
The downside is that if the growth falters the stock price will be punished.
What’s throwing people off is Nykaa’s high PE of 1600. But if u plug in a net margin of 15%, then at 4500Cr of sales, we get EPS of 14.2 and a PE of 107
And that is not terrible. Reason: at 1300 a share one year fwd PE would be 65, much like Hindustan Lever!
So, valuation doesn’t seem to bother me, as long as I believe growth of 30% to 40% will be intact for another 2/3 years.
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