Nykaa shares: The December 2023 quarter saw an almost twofold increase in Nykaa’s net profit. For the quarter that concluded in October and ended in December of 2023, it recorded a consolidated net profit of Rs 16.2 crore.
In short
- During Wednesday’s trading, Nykaa shares rise 6%.
- In Q3FY24, the company reported around twice PAT.
- Brokerages are still inconsistent; reduce the goal prices.
FSN E-Commerce Ventures Ltd.’s (Nykaa) stock increased by almost 6% on Wednesday during trade after the company revealed impressive results for the quarter ending in December 2023. Despite respectable profits, brokerage firms have mixed feelings about the organization overall. In the December 2023 quarter, Nykaa’s net profit almost doubled, reaching a consolidated figure of Rs 16.2 crore. This marks a 97% increase compared to the Rs 8.2 crore reported in the same period the previous year.
Nykaa’s revenue from operations saw a 22% year-on-year increase to Rs 1,789 crore in the third quarter, up from Rs 1,463 crore in the same period last year. EBITDA for the quarter rose by 26% year-on-year to Rs 98.9 crore, with EBITDA margins standing at 5.5%. In the quarter, the gross merchandise value (GMV) increased by 20% year-on-year to Rs 761 crore. The combined GMV for beauty and personal care (BPC) experienced a 25% year-on-year growth, while the net sales value (NSV) grew by 20% year-on-year, mainly attributed to increased discounting by brands in the mass and masstige segments.
Nykaa reported consistent revenue growth, supported by a 25% year-on-year increase in BPC GMV and a 40% year-on-year rise in fashion GMV. However, the consolidated GM print of 42.5% experienced a decrease of 58 basis points (bps) quarter-on-quarter (QoQ), attributed to increased discounting and reduced advertising income, according to Kotak Institutional Equities.
Nykaa
The contribution margin for BPC decreased by 225 basis points quarter-on-quarter to 21.9%, while fashion CM saw a notable improvement of 247 basis points quarter-on-quarter to 10.7%. Although there was a significant reduction in FY2024 EPS, the cut in FY 2025-26 EPS is lessened due to the anticipated loss reduction in eB2B. A roll-forward to March 2026 results in a revised fair value of Rs 165, down from Rs 170, based on discounted cash flow (DCF) analysis. Despite this, the rating remains ‘add’.
After the Q3 results announcement, FSN E-Commerce Ventures’ shares surged by 5.95 percent to reach Rs 170.05 on Wednesday, resulting in a total market capitalization of nearly Rs 48,000 crore. In the preceding trading session on Tuesday, the stock had closed at Rs 160.50.
Nykaa’s performance remained steady, maintaining growth momentum post-Q2FY24, with the Beauty and Personal Care (BPC) segment and Fashion segment reporting net sales value (NSV) growth of 20 percent and 31 percent, respectively. Overall EBITDA margins remained consistent at 5.5 percent and showed a slight improvement of 20 basis points year-on-year. The company noted a 60 basis points impact from ESOP and GCC expansion, which is expected to persist. Nykaa emphasized its continued focus on accelerating growth, as stated by Nuvama.
Nykaa shares jump 6% on Q3 profit doubling; brokerages cut target prices.
The contribution from own brands increased by 30 percent year-on-year, raising its share in GMV to 12 percent. Gross margins for the fashion segment improved to 77 percent. However, fulfillment and marketing expenses remained high. Overall, the fashion business witnessed a significant enhancement in contribution margin, reaching 11 percent compared to 1 percent in Q3FY23. This was stated alongside a target price of Rs 189.
Elara Capital, a domestic brokerage, has upheld its ‘accumulate’ rating for Nykaa while reducing its target price to Rs 185. HSBC, on the other hand, has maintained a ‘buy’ rating but lowered its target price to Rs 240. Jefferies continues to advocate a ‘buy’ stance on Nykaa but has adjusted its target price to Rs 210. Morgan Stanley maintains an overweight position on Nykaa with a revised target price of Rs 190.
