Nykaa shares hit all-time low today! Should you buy now?

Of late, the shares of Nykaa (listed as FSN E-Commerce Ventures Limited) have been under tremendous selling pressure. The stock crashed 9 per cent to hit an all-time low of Rs 1371.35 on BSE. Market cap of the firm slipped below Rs 70,000 crore.
 
However, the stock saw some recovery in the afternoon session today. At 13:30 hours, the shares were trading 3.42 per cent lower at Rs 1453.40 on BSE.
 
It has tanked over 47 per cent from its all-time high. The stock touched an all-time high of Rs 2,574 on November 26, 2021. Earlier this year the shares of all the new-age Internet companies were on a selling spree, mirroring the global trend.
 
Nykaa is witnessing some lower-level buying taking cues from some recovery in the broader indices. The stock may go up to Rs 1500-1520 levels in this momentum, however, doesn't seem sustainable at higher levels. Investors may remain cautious and take this opportunity to offload their positions," Dr. Ravi Singh, Vice President and Head of Research, ShareIndia told BusinessToday.In.
 
The company posted a weak set of numbers for the quarter ended December 2021. FSN E-Commerce Ventures, the parent company of online beauty e-commerce platform Nykaa, reported a 58 per cent year-on-year (YoY) decline in its consolidated net profit for October-December at Rs 29 crore. Its net profit stood at Rs 1.2 crore in the preceding September quarter.
 
However, revenue from operations grew 36 per cent YoY and 24 per cent quarter-on-quarter (QoQ) to Rs 1,098.4 crore from Rs 808 crore in the October-December quarter of 2021.
 
Brokerage house Dolat Capital said that Nykaa’s Q3FY22 performance was a mixed bag. Despite the same, the number of visits and growth in monthly active users (MAUs) was tepid 4/3 per cent QoQ. Higher conversion ratio and AOV drove gross merchandise value (GMV) growth of 49 per cent.
 
"Led by its strong business position, we expect Nykaa to trade at scarcity premium. But current valuations at 16.4/11.6x FY23/24E EV/Sales seem too rich for our comfort, howsoever long we may stretch the timeline. Implied expectations leave limited room to err on execution and growth trajectory of the space," it added.
 
"Cosmetics had suffered due to COVID-19. Those things have started coming back but we don't believe it is back to the pre-COVID-19 level of consumption," Nykaa Executive Chairperson, MD and CEO Falguni Nayar told PTI.
 
She said that last year, the company had put a brake on marketing expenses due to COVID-19 and, hence, this is a one-time impact that has reflected on the third quarter.
 
Nykaa shares got listed at a premium of 79 per cent to the issue price, marking a strong listing for the online beauty retailer. The company made its market debut at Rs 2,001 per share on the BSE against the IPO issue price of Rs 1,125.