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Nykaa sees sharp upswing on robust performance in the third quarter

Overall at the consolidated level, Nykaa expects overall NSV to grow at a mid-20s percentage rate and revenue to grow at a low-20s percentage rate on YoY basis in 3QFY24

Nykaa
Devangshu Datta
3 min read Last Updated : Jan 09 2024 | 11:11 PM IST
Nykaa’s business update for Q3FY24 led to a sharp upswing (up 6.11 per cent) in the stock price on Tuesday.

While the festive season consumption has been generally considered disappointing, Nykaa saw growth across its three business verticals.

Several analysts tracking the segment have pared down revenue and earnings expectations for most retailers, following the muted consumption noted in the festive season.

For Nykaa, in the Beauty & Personal Care (BPC) category, the net sales value (NSV) is expected to grow by 20 per cent on a year-on-year (Y-o-Y) basis, despite mid-20s percentage growth in gross merchandise value (GMV).

This is due to brand-led pricing and discounting in the mass categories. The underlying order volume growth is healthy and consistent according to management while India has amongst the lowest per capita BPC spends in the world.

The company is still investing in the category and launching initiatives like “Nykaaland”, India’s first beauty & lifestyle festival which had over 15,000+ ticketed visitors.

The company believes that BPC industry growth is currently below long-term trends and should revert to median levels in the near/medium term. Verticals like Superstore by Nykaa continue to see high growth and account for a meaningful share of overall net sales value.

The fashion NSV is expected to be in the low-30s percentage while the GMV is likely to be 40 per cent Y-o-Y. Industry-wide, discretionary consumption remained muted and did not see the jump normally expected in the festive season.


Overall at the consolidated level, Nykaa expects overall NSV to grow at a mid-20s percentage rate and revenue to grow at a low-20s percentage rate on a Y-o-Y basis in 3QFY24.

In BPC, analysts will reduce heightened expectations as a result and given the weak industry trends, they may also cut the FY24 growth estimate by 150-200 bps. In fashion, NSV growth was at 32 per cent Y-o-Y in Q3FY24 (it was 23 per cent YoY in H1FY24), which beat the earlier consensus estimate of 26 per cent Y-o-Y.

BPC is expected to contribute close to 80 per cent of revenues for FY24 and it is the only segment that is generating positive Ebitda.

Fashion could eventually be the high-margin segment but it currently contributes around 7.65 per cent of revenues and is Ebitda negative.

Overall, for Q3FY24F, consolidated revenue growth could hit 22 per cent Y-o-Y and the Ebitda margin could be held at 6.4 per cent, which is better than the industry norm.

Ideally, the Ebitda margin needs to pick up some more in Q4FY24 to nearly 6 per cent for the full year. 

Analysts are looking at a band of 5.5 per cent to 6 per cent Ebitda for the full year.

The consensus target price post the sales update is Rs 187 and is at the same level as the current market price. About 58 per cent of analysts tracking the stock have a ‘buy’ rating.  

Topics :NykaaNykaa Start-upshare marketstock market trading

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