The share price of Nykaa experienced a decline exceeding 2% in early trading on Tuesday, even though the company showcased solid business performance for the second quarter. Specifically, Nykaa shares dropped by as much as 2.65%, reaching ₹188.80 each on the Bombay Stock Exchange (BSE).
FSN E-Commerce Ventures, the parent company of Nykaa, announced that its consolidated net revenue grew in the mid-twenties percentage range during the quarter ending September 2024. This indicates robust business momentum, particularly in the beauty and fashion sectors.
Performance Highlights of Nykaa’s Business Verticals
According to a recent stock exchange filing on October 7, Nykaa’s beauty vertical registered impressive net revenue growth along with a strong Net Sales Value (NSV) growth in the mid-twenties. Furthermore, the Gross Merchandise Value (GMV) growth was reported to be even higher, demonstrating strong overall performance across multiple channels, including omnichannel retail business and its owned brands, as well as the eB2B distribution segment. This comes ahead of the festive season, which typically sees increased consumer spending.
Fashion Vertical and Recent Acquisitions
In contrast, the company’s fashion vertical projected an NSV growth in the early teens for Q2FY25. The acquisition of LBB, Nykaa’s content platform, is performing exceptionally well, contributing to the overall growth of the fashion vertical, which now sees revenue growth in the early twenties percentage range.
Market Trends and Consumer Demand
Nykaa noted that consumer demand has shown signs of being subdued during the first half of this financial year. However, there is an optimistic outlook within the industry, anticipating a gradual revival in demand during the second half, primarily driven by the festive and wedding season. This period is crucial for retailers as it typically results in increased sales.
Anticipated Q2 Results
Going into the Q2 results, analysts forecast a remarkable year-on-year (YoY) growth of approximately 26.2% in revenues for FSN E-Commerce Ventures, projecting total revenues to reach ₹1,902 crore. This growth is largely attributed to the BPC (Beauty and Personal Care) business, while the fashion segment is expected to remain subdued.
Profit and EBITDA Expectations
Nykaa’s net profit for the second quarter of FY25 is projected to increase significantly to ₹27.9 crore, up from ₹9.3 crore in the same quarter last year. Analysts also anticipate a 45% rise in EBITDA, expected to reach ₹116.9 crore as compared to ₹80.6 crore year-on-year. Notably, the EBITDA margin is likely to show a slight improvement, rising to 6.1% in Q2FY25 from 5.4% a year prior, reflecting better operational efficiency.
Current Market Position of Nykaa Shares
In terms of stock performance, Nykaa shares have witnessed a decline of over 11% over the past month. However, when viewed over a larger timeframe, the stock has appreciated by more than 8% in the last three months and has shown a year-to-date increase of over 11%. Looking at the past year, Nykaa shares have rallied more than 27%, showcasing some resilience despite recent volatility in the market.
Current Trading Status
As of 9:45 am, Nykaa shares were trading at ₹190.95, reflecting a decrease of 1.55%. Investors are advised to keep an eye on market dynamics as they navigate through these fluctuations.
Disclaimer: The above insights are derived from individual analysts and broking companies, not affiliated with any financial advisory service. Investors should consult certified financial experts before making investment decisions.
