Nykaa's parent company, FSN E-Commerce Ventures, witnessed a surge in its shares after the announcement of its inclusion in the MSCI Global Standard Index. On May 14, 2025, the stock rallied as much as 3.44% on the BSE, reaching ₹204.35 apiece. This inclusion, part of MSCI's May rebalancing, is projected to bring significant passive inflows into the stock. The changes will be effective from the close of trading on May 30, 2025.
Expected Inflows and Index Adjustments
According to estimates from Nuvama Alternative & Quantitative Research, Nykaa is expected to attract passive inflows of around $199 million due to its inclusion in the MSCI Global Standard Index. JM Financial estimates inflows of approximately $172 million. Coromandel International has also been added to the index and is projected to attract inflows as well.
MSCI also made adjustments to its India Domestic Index, adding Coromandel International and GMR Airports, while removing Sona BLW Precision Forgings. In the MSCI India Domestic Smallcap Index, 12 companies were added, and 21 were removed.
Market Impact and Analyst Views
The inclusion in the MSCI Global Standard Index generally leads to increased demand for the stock from global investors, which can drive up the stock price and increase trading volumes. Conversely, exclusion from such an index can lead to selling pressure and a decline in the stock price.
Anshul Jain, Head of Research at Lakshmishree Investments, noted that Nykaa's share price is forming a 30-week-long rounding bottom on the weekly chart. However, the setup lacks strength due to weak volume, indicating limited institutional participation. Jain added that the stock action also lacks a clean pivot breakout, making the pattern less reliable. If Nykaa sustains upward movement, it may head towards the ₹230 level, but traders should be cautious and await clearer confirmation.
Stock Performance and Technical Indicators
Nykaa's share price has demonstrated strong performance in the short to medium term, gaining 10% over the past month and 17% in the last three months. Year-to-date, the stock is up 20%, with a 17% return over the past year and an impressive 60% gain over the last two years.
The stock is trading above all eight key simple moving averages (SMAs), including the 100-day, 150-day, and 200-day SMAs, suggesting strong technical momentum. The 14-day Relative Strength Index (RSI) stands at 64.1, indicating that while the stock is not yet in overbought territory, caution may be warranted as it approaches that threshold.
Analysts' Price Targets and Ratings
According to 24 analysts, the consensus rating for Nykaa stock is "buy". The analysts have a 1-year price target for NYKAA is 184.17 INR, with a maximum estimate of 240.00 INR and a minimum estimate of 103.00 INR.
Wall Street analysts forecast a slight downside over the next 12 months. The average 1-year price target is INR 190.8, with a low forecast of INR 136.35 and a high forecast of INR 252.
Company Fundamentals
Nykaa is the largest specialty beauty and personal care platform in India in terms of product value sold in FY21 and one of the fastest-growing fashion platforms in India based on GMV growth. It has the highest average order value among leading online beauty and personal care platforms in India.
Key fundamental metrics include a market cap of ₹56,542 Cr, a price-to-book ratio of 43.4, and a low return on equity of 2.58% over the last 3 years. The company's working capital requirements have reduced from 80.7 days to 56.3 days.
Impact of MSCI Index Inclusion
Inclusion in the MSCI Index can significantly impact a stock's price and trading volume. The addition of Nykaa to the MSCI Global Standard Index is expected to increase demand from global investors, potentially leading to further gains in the stock price.
