Profit booking in Nykaa shares? Should you buy beauty products firm stock after Q1?

In the Q1 period, the company reported a net profit of Rs 13.6 crore, up 150 per cent YoY, while the revenue from operations also climbed 23 per cent on-year to Rs 1,746.1 crore. EBITDA at the company also registered 31 per cent on-year growth to Rs 96.1 crore. Meanwhile, EBITDA margin clocked 30 bps gains and came in at 5.5 per cent in the reporting quarter as against 5.2 per cent in the same quarter last year.

Adjusted EBITDA stood at Rs. 109 crore, a robust growth of 44 per cent YoY, with margins of 6.2 per cent (Adjusted for ESOP expenses, new business (GCC operations) and corporate restructuring expenses)

On the sideline of its results, the company announced an increase in ownership in the Dot and Key and Earth Rhythm. The company said that it is increasing its existing majority stake of 51 per cent in Dot & Key to 90 per cent by acquiring the additional stake of 39 per cent for a consideration amount of Rs 265 crore.

JP Morgan maintained underweight call on the stock and sees a downside of over 26 per cent with the target pegged at Rs 138. The rationale given by the brokerage is that the higher marketing spends weigh on margins. Furthermore, in the company's fashion segment, the company posted weak revenue growth, while the margin expansion has come off  through stake increase in Dot & Key and Earth Rhythm.

Jefferies maintains bullish view on the stock and maintains buy with a target of Rs 220, implying over 18 per cent gains.