Sensex above 61,500, Nifty holds 18,300; Asian Paints top gainer

Jyoti Roy, DVP- Equity Strategist, Angel One, on Nykaa IPO

FSN E-Commerce Ventures (Nykaa) is coming out with an IPO of ₹5,184-5,352 crore at a price band of ₹1085-1125. The IPO will consist of an offer for sale of 41.97 crore shares and fresh issue of shares amounting to ₹630 crores. The issue opens on 28 October021 and closes on 1 November. 

Incorporated in 2012, Nykaa is a digitally-native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers. Nykaa has a diverse portfolio of beauty, personal care and fashion products, including their owned brand products manufactured by them. Nykaa offers its products through both online and offline channels. Naykaa is catering to the fast growing beauty and personal care market which is estimated to almost double to ₹2 lakh Cr. by CY2025 from ₹1.1 Lakh Cr. in CY2020. Moreover the Indian fashion market is estimated to grow 2.2x from ₹3.8 lakh Cr. in CY2020 to ₹8.7 lakh Cr by CY2025.

At the upper end of the price band, the Nykaa is valued at 21.8x its FY21 revenues While valuations may appear to be expensive Naykaa is one of the very few profitable Unicorns in India and we believe that the company is well positioned to benefit from the exponential growth in the online beauty and fashion retailing business over the next decade.hence we believe that that the valuations are justified and hence we recommend to SUBSCRIBE to the issue.

ICICI Securities on Cipla 

We marginally tweak our estimates to factor in Q2FY22 results. Maintain ADD on the stock with revised target price of Rs1,004/share (earlier Rs1,000/share) based on 25xFY23E earnings and Rs32/share for Revlimid. 

Key downside risks: Regulatory hurdles, forex fluctuations and lower growth in India market.

We expect revenue/EBITDA/Adj. PAT CAGR of 9.2/10.4/14.2% over FY21- FY23E on high base of FY21 which had ~4% revenue contribution from COVID-19 portfolio and higher cost savings. The company turned net cash in FY21 and FCF generation of Rs20bn/year over the next two years will further strengthen the balance sheet. We are positive on management’s renewed focus on India business, cost control initiatives and focus on RoCE. We expect RoIC to improve to 17.6% in FY23E from 9.4% in FY20.

Cipla rises after strong Q2 performance 

Cipla Ltd pulled out a decent Q2 performance despite a decline in sales of covid-19 drugs. The India business growth of 16% year-on-year (y-o-y)…