Thanks that you understood my intent of writing “nifty inclusion” is from broader point of view of vision & conviction but not from speculative perspective as is rampant everywhere.
I’m putting across my thoughts unfiltered, so my sharing process remains genuine. I have also been promptly updating my losses & exists for the same purpose.
I think from my portfolio, Dmart, Page, Nykaa are eligible candidates for Index inclusion or become mega-caps in future.
In my opinion, Nykaa does hold a better prospect than Page, relatively. It is best to sell spades during gold rush than go find the gold itself. Page is a manufacturer while Nykaa is e-commerce primarily. Purplle & Glamm, who started along with Nykaa are not even 1/10th of the size of Nykaa. It is not easy to achieve the scale that Nykaa got without execution capabilities. Doing all this while Amazon, Flipkart, Myntra are ruling the space. Page at some point has to diversify to some other product line and be successful at it IF it has to become mega cap. This is much difficult than Nykaa who now has to ensure that unit economics are improved & scalability is achieved with efficiency, technology usage while customer experience being non-negotiable. The operating leverage, the platform benefits of ad revenue, first mover benefits are not appreciated well. Nykaa makes an estimated forward 300 crore ad revenue because it is an e-commerce platform. Page cannot have this revenue stream. Nykaa presently invests all this cash flows into Fashion & other fledgling businesses & so the profits are invisible. So, at steady state, I expect Nykaa to report RoE of 30% plus, margins of mid-teens, growth of 25%. My entire thesis of holding is based on this premise. Let’s see how the future unfolds.
I’m afraid of talking up on Nykaa ad nauseam particularly when the stock is down as I may come across as being publicist. Let the numbers do the talking!
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