Nykaa rises 5% on Q3 update; JM Financial keeps it among top new-age bets

Nykaa share price: Shares of Nykaa, owned and operated by FSN E-Commerce Ventures, were buzzing in trade on Monday, January 6, 2025, as the scrip zoomed up to 5.21 per cent to hit an intraday high of Rs 176.50 per share. 

 

The rise in Nykaa share price was fuelled by a healthy December quarter (Q3FY25) business update. 

 

Nykaa reported a strong performance in Q3FY25 with consolidated net revenue growth likely to be higher than mid-twenties. The growth outpaced the company's consolidated gross merchandise value (GMV) growth for the same period, highlighting an improved GMV-to-Net Revenue conversion trend.

 

The beauty vertical demonstrated accelerated growth compared to previous quarters, with Net Revenue growth surpassing the mid-twenties percentage. GMV growth in this segment is anticipated to be in the low-thirties, reflecting strong momentum across Nykaa’s diverse beauty businesses, including its e-commerce platform, retail stores, owned brands, and eB2B distribution.

 

Customer acquisition continues to gain traction, with the eB2B distribution platform, Superstore by Nykaa, driving rapid expansion. The platform now accounts for 8 per cent of the beauty vertical’s GMV, up from 7 per cent a year ago, and services approximately 260,000 transacting retailers across more than 1,100 cities.

 

Moreover, in the fashion segment, the net revenue growth is expected to reach around 20 per cent, while net sales value (NSV) growth is estimated to remain in the low to mid-teens. This reflects sustained growth in content, marketing, and service-related income streams.

 

Regarding future prospects, Nykaa stated, "We believe online fashion demand continues to be subdued, but we remain optimistic about the long-term growth opportunity."

 

According to analysts at JM Financial, Nykaa's Q3FY25 revenue update highlighted strong performance in the Beauty and Personal Care (BPC) segment, with year-on-year (YoY) growth in the low-thirties. 

 

Notably, the eB2B platform now contributes 8 per cent to the BPC GMV. Based on the analysis, the core BPC Y-o-Y growth is estimated to fall within the 27-29 per cent range. 

 

The robust growth, despite concerns about the potential impact of Quick Commerce (QC), reinforces the view that QC addresses a different use case and does not significantly threaten Nykaa’s market position in BPC.

 

On the fashion front, Nykaa reported muted growth, with NSV increasing in the mid-teens. However, the brokerage’s market observations suggest that Nykaa likely gained market share amidst ongoing challenges in the online fashion space.

 

Considering these trends, analysts have adjusted their forecasts to reflect significantly lower growth expectations for Nykaa’s fashion segment while accounting for the possibility of sustained lower GMV-to-Revenue conversion in the BPC segment. 

 

Despite these adjustments, analysts reaffirm Nykaa as a top pick in the internet sector, maintaining a target price of Rs 240 for March 2026. The target reflects an upside of 43 per cent.

 

About Nykaa

 

Nykaa, founded in 2012 by Falguni Nayar, is among the leading Indian e-commerce platforms specialising in beauty, wellness, and fashion products. 

 

Headquartered in Mumbai, Nykaa has established itself as a go-to destination for a wide range of offerings, including makeup, skincare, haircare, fragrances, grooming appliances, and health and wellness items. 

 

In addition to its expansive product selection, Nykaa provides unique services like a beauty and makeup blog, an expert advice portal, a virtual makeover tool, and a dedicated beauty helpline to enhance the shopping experience. Customers can access Nykaa's offerings through its user-friendly website, mobile app, and a growing network of over 100 physical stores across India.

 

The market capitalisation of Nykaa is Rs 50,061.16 crore, according to BSE. The company falls under the BSE 200 category.

 

At 12:25 PM, Nykaa shares were trading 4.38 per cent higher at Rs 175.10 per share. In comparison, BSE Sensex was trading 1.17 per cent lower at 78,299.66 levels.