Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Capital Markets

FSN E-Commerce Ventures (Nykaa) / Equity Capital Markets

<p>RHP overviews and information about <a href="https://www.smartkarma.com/entities/fsn-e-commerce-ventures-nykaa" target="_blank" data-smartkarma-citation="entities:33796:1" rel="noopener">FSN E-Commerce Ventures (Nykaa) (1003622D IN)</a>'s business is widely covered both on this platform as well as across the internet (Twitter/Youtube). </p>
<p>This Insight assumes that Nykaa's broader business and IPO specific details are well known and hence focus is on earning power of the business, forecasts and valuations. </p>
<p>The inspiration for this insight is Naval's legendary thread - <em>How to Get Rich (without getting lucky)</em></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/928/original/image_31811942261635356542811.png?1635356545" class="editor-image img-responsive" data-smartkarma-image-id="237928"></figure>

RHP overviews and information about FSN E-Commerce Ventures (Nykaa) (1003622D IN)'s business is widely covered both on this platform as well as across the internet (Twitter/Youtube). 
This Insight assumes that Nykaa's broader business and IPO specific details are well known and hence focus is on earning power of the business, forecasts and valuations. 
The inspiration for this insight is Naval's legendary thread - How to Get Rich (without getting lucky)


Nykaa IPO | Can It Make You Rich? (Without Getting Lucky)

Investment Research - Asia Consumer Sector, Investory

Devi Subhakesan

Investment Research - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

<p>In this insight, we analyze <a href="https://www.smartkarma.com/entities/fsn-e-commerce-ventures-nykaa" target="_blank" data-smartkarma-citation="entities:33796:1" rel="noopener">FSN E-Commerce Ventures (Nykaa)</a> 's IPO by valuing its two distinctly different businesses - Beauty &amp; Personal care (BPC) and Fashion - separately, based on two sets of peer valuation. We also share our GMV (Gross Merchandise Value) projections for <a href="https://www.smartkarma.com/entities/fsn-e-commerce-ventures-nykaa" target="_blank" data-smartkarma-citation="entities:33796:1" rel="noopener">FSN E-Commerce Ventures (Nykaa)</a> based on a bottom-up analysis using key operational metrics of Beauty &amp; Personal care (BPC) and Fashion retail. We also ran a rationality check on our projections by comparing them with top-down analysis. See detailed tables in the report below.</p><p>A key challenge that investors face in valuing Nykaa is the lack of listed comparable peers. We note that Nykaa's established BPC business is comparable to any high growth-high margin branded consumer, retail play in India given a similar operating structure. However, its emerging fashion retail is run as a marketplace with much stronger growth potential but at lower margins. Hence online consumer marketplace operators like <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOMATO IN)</a> could be a better fit for its peer comparison.</p><p>For background read on the company's key strengths, concerns, and competitive landscape, please refer to our earlier insight <a href="https://www.smartkarma.com/insights/fsn-ecommerce-nykaa-ipo-glowing-beauty-growing-fashion-a-primer" target="_blank" data-smartkarma-citation="insights:55547" rel="noopener">FSN ECommerce (Nykaa) IPO: Glowing Beauty, Growing Fashion. A Primer.</a></p>

In this insight, we analyze FSN E-Commerce Ventures (Nykaa) 's IPO by valuing its two distinctly different businesses - Beauty &amp; Personal care (BPC) and Fashion - separately, based on two sets of peer valuation. We also share our GMV (Gross Merchandise Value) projections for FSN E-Commerce Ventures (Nykaa) based on a bottom-up analysis using key operational metrics of Beauty &amp; Personal care (BPC) and Fashion retail. We also ran a rationality check on our projections by comparing them with top-down analysis. See detailed tables in the report below.A key challenge that investors face in valuing Nykaa is the lack of listed comparable peers. We note that Nykaa's established BPC business is comparable to any high growth-high margin branded consumer, retail play in India given a similar operating structure. However, its emerging fashion retail is run as a marketplace with much stronger growth potential but at lower margins. Hence online consumer marketplace operators like Zomato (ZOMATO IN) could be a better fit for its peer comparison.For background read on the company's key strengths, concerns, and competitive landscape, please refer to our earlier insight FSN ECommerce (Nykaa) IPO: Glowing Beauty, Growing Fashion. A Primer.

FSN Ecommerce IPO Valuation: Nykaa Can Be Appetizing if You Liked Zomato

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

External broker reports(aggregated public sources)

Equity Bottom-Up

<p>Robust store operating metrics (breakeven in 18-24 months of its operations and one of industry best revenue per sq ft: Rs 32000+) Q2FY22 Results: Operating performance better than consensus estimates as...</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Robust store operating metrics (breakeven in 18-24 months of its operations and one of industry best revenue per sq ft: Rs 32000+) Q2FY22 Results: Operating performance better than consensus estimates as...Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Avenue Supermarts: Strong Performance; Rich Valuations Limit Upside

External broker reports(aggregated public sources), Axis Direct

Axis Direct

<p>We revise our estimates leading to an upward revision in our target price to Rs 3,600/share (prev Rs 3,110) valuing at 45x FY24E EV/EBITDA. We downgrade the stock to SELL from HOLD earlier.</p>
<div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

We revise our estimates leading to an upward revision in our target price to Rs 3,600/share (prev Rs 3,110) valuing at 45x FY24E EV/EBITDA. We downgrade the stock to SELL from HOLD earlier.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Avenue Supermarts: Priced to Perfection; Downgrade to Sell

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

<p>We maintain our SELL recommendation on DMART with a revised DCF-based TP of INR 2,700/sh (earlier 2,260/sh), implying 35x Dec-23E for the standalone business + 4x Dec-23E sales for DMART Ready. Note: the target price change is a function of EPS change (+4%), a 6M DCF rollover (+9%), and a marginal multiple increase (+4%). Avenue Supermarts: D-MARTs Q2FY22 revenue recovery was healthy (47% growth YoY). Profitability and unit economics were in line but have not yet caught up with the pre-pandemic levels.</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

We maintain our SELL recommendation on DMART with a revised DCF-based TP of INR 2,700/sh (earlier 2,260/sh), implying 35x Dec-23E for the standalone business + 4x Dec-23E sales for DMART Ready. Note: the target price change is a function of EPS change (+4%), a 6M DCF rollover (+9%), and a marginal multiple increase (+4%). Avenue Supermarts: D-MARTs Q2FY22 revenue recovery was healthy (47% growth YoY). Profitability and unit economics were in line but have not yet caught up with the pre-pandemic levels.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

India

Avenue Supermarts Ltd. (ASL) owns and operates hypermarkets and supermarkets. The Company offers products such as garments, footwears, toys and games, bed and bath linen, stationery, grocery, household, and electronic products. ASL operates throughout India.

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Avenue Supermarts Ltd (DMART IN)

Nykaa IPO | Can It Make You Rich? (Without Getting Lucky)

Inspired by Naval's legendary thread, this Insight is an attempt to use his analogy to provide a different perspective on Nykaa 's IPO along with...

Pranav Bhavsar

FSN Ecommerce IPO Valuation: Nykaa Can Be Appetizing if You Liked Zomato

Segment-wise valuation analysis based on separate peer set to better reflect the distinct operating structures and margin/growth profiles of...

Devi Subhakesan

Avenue Supermarts: Strong Performance; Rich Valuations Limit Upside

Robust store operating metrics (breakeven in 18-24 months of its operations and one of industry best revenue per sq ft: Rs 32000+) Q2FY22 Results:...

ICICI Securities Limited

Avenue Supermarts: Priced to Perfection; Downgrade to Sell

We revise our estimates leading to an upward revision in our target price to Rs 3,600/share (prev Rs 3,110) valuing at 45x FY24E EV/EBITDA. We...

Axis Direct

HSIE Results Daily: Avenue Supermarts

We maintain our SELL recommendation on DMART with a revised DCF-based TP of INR 2,700/sh (earlier 2,260/sh), implying 35x Dec-23E for the...

HDFC Securities

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