Nykaa shares' 64% rally crowns it as internet leader, but do rich valuations justify the risk-reward?
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Shares of FSN E-Commerce Ventures have staged a sharp comeback, rallying 64% over the past year to emerge as the top performer in the internet space amid signs of an operational turnaround. However, the valuations of Nykaa’s parent company raise concerns about whether the current price offers a favourable risk-to-reward proposition and if the stock has sufficient headroom for further upside. Nykaa's high double-digit returns have come at a time when markets have struggled due to external factors like US tariffs, geopolitical tensions, and the Fed's interest rate status quo against the expectations of a rate cut. Among the internal factors, weak domestic earnings and premium valuations have weighed on markets. Sunny Agrawal, Head, Retail Fundamental Desk at SBI Securities, decodes the new-found enthusiasm for FSN E-Commerce shares among the investors. According to him, Nykaa has been delivering robust growth in operating profit for...