Business strategy

Nykaa Stock Falls 4% As Lighthouse Sells 1.8 crore Shares Via Block Deal; Buy, Sell or Hold

Nykaa Share Price: Nykaa shares fell over 4 per cent on NSE on news of block deal and were trading at Rs 175.95. Lighthouse India, which held 2.04 per cent stake in the company, today sold around 1.8 crore shares in the company. The stock is still trading at a high PE multiple of 100.

Lighthouse India was looking to sell Nykaa shares worth Rs 335 crore via a block deal at a price band of Rs 180-183.50 per share.

The new-age stock slumped to the day’s low at Rs 175 per share during the day amid a spurt in volume by more than 1.26 times. In the early morning hours, over 37 million shares of Nykaa changed hands.

After the end of lock-in period on November 10, 67 per cent holding got open for trading. The selling has come after TPG and Lighthouse India Fund reduced their stakes from combined ownership of 5 per cent in FSN E-Commerce Ventures

Lighthouse India Fund-III had earlier sold shares in Nykaa worth Rs 525 crore. Other sellers in the past have included Segantii India Mauritius and American private equity firm TPG.

Nykaa had, notably, posted strong results in the second quarter of the current fiscal, with the net profit jumping multifold to Rs 5.19 crore, as compared to Rs 1.17 crore clocked in the year-ago period.

The consolidated revenue from operations during the September 2022 quarter jumped to Rs 1,230.8 crore, which was 39 per cent higher as against the revenue of Rs 885.26 crore reported in the same quarter of the last fiscal.

What Should Investors Do Now?

However, brokerages have remained bullish on Nykaa with 11 out of 16 analysts covering the stock recommending it a buy. The average price target signals an upside potential of about 47 per cent, shows Trendlyne data.

Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., said: “Nykaa is witnessing high volatility amid the exit of PE funds after the end of the one-year lock-in period. The counter is trying to find its feet in the Rs 170-160 area but is struggling to sustain itself above the Rs 200 mark. It must cross the Rs 220 mark for any meaningful recovery, while if it falls below the Rs 160 mark, the pain will continue for more downside. For the time being, new investors should avoid this counter, while existing investors can keep their stop loss at Rs 160.”

Manoj Dalmia Founder and Director-Proficient Equities Limited, said: “Shares of FSN E-Commerce Ventures Ltd., owner of beauty e-retailer Nykaa, fell as much as 5% today as pre-IPO investors continue to exit the stock after the expiry of lock-ins. Concerns over valuations and rising global rates have also affected some

high-profile internet stocks, Lighthouse India sold shares worth Rs 335 crore, and private equity player TPG Growth sold Nykaa shares worth Rs 1,000 crore. The stock is currently under selling pressure and is consolidating at the current level, any closing below Rs 161 can take the stock to Rs 134 levels. Investors can avoid buying in this stock.”

Disclaimer:Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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