FSN E-Commerce Ventures, the parent company of Nykaa, has released its fiscal third quarter earnings for the period ending on December 31, 2024, showcasing impressive growth and performance across its core segments.
According to the official announcement, the company reported consolidated net profit at Rs 26.41 crore, marking significant growth of 51.35% compared to Rs 17.45 crore from the same quarter last year. Revenue from operations soared to Rs 2,267.21 crore, reflecting a 26.74% increase from Rs 1,788.80 crore during the corresponding quarter of FY24. The EBITDA amount reached Rs 140.7 crore, up 42.6% YoY, underscoring substantial margin expansion amid increased operational efficiency.
Analysts tracking Nykaa had anticipated strong results for Q3FY25. According to Kotak Institutional Equities, the company’s net sales were estimated to be at Rs 2,278.1 crore, with YoY growth of 27.4% and QoQ growth of 21.5%. The anticipated EBITDA was pegged at Rs 156.9 crore, up by 58.8% YoY and 51.3% QoQ, which translates to EBITDA margins expected to exceed 6.9%. Nuvama Institutional Equities suggested similar trends, projecting revenue at Rs 2,271.8 crore—up 27% YoY and 21% QoQ—while Equirus Securities also weighed in, predicting net sales near Rs 2,233.1 crore.
Key drivers behind this growth are attributed to the beauty and personal care (BPC) segment, with overall GMV (Gross Merchandise Value) demonstrating strong growth of 25% YoY, amounting to Rs 4,527.90 crore. Kotak Institutional Equities noted the beauty sector recorded GMV growth of 32%, affirming the segment's strong consumer demand. A substantial contributor to this trend was Nykaa’s impressive increase in its customer base, enhancing engagement through the launch of over 200 new beauty brands during the quarter.
"We model overall GMV and revenue growth of 27 percent YoY, primarily driven by BPC GMV/revenue growth of 32 percent and 28 percent YoY and fashion business GMV and revenue growth of 1 percent and 21 percent YoY," emphasized Kotak Institutional Equities, showcasing the confidence analysts have placed on Nykaa's business model and market stability.
Despite the upbeat results from the beauty segment, the fashion division faced some headwinds. Revenue for Nykaa Fashion recorded at Rs 199 crore marked a 21% increase YoY, but GMV growth was modest at only 8% YoY, emphasizing issues with premium-wear demand which have impacted performance. This downturn suggests challenges amid changing consumer preferences and market conditions. Analysts speculate these factors played a part as Nikka's shares declined by 2.25% during trading, closing at Rs 169.60.
Despite challenges within its fashion vertical, Nykaa remains focused on broadening its retail horizons. The company has expanded its offline portfolio, launching 12 new stores this quarter, leading to a total of 221 locations. The total retail space now exceeds 2.1 lakh square feet, representing 31% growth YoY. Such expansions reflect Nykaa's commitment to offering customers diverse shopping options and experiences.
Meanwhile, the acquisition of Dot & Key, another beauty brand, has proven productive with the brand achieving remarkable scale, generating GMV and NSV run rates of Rs 900 crore and Rs 510 crore respectively, showcasing the effectiveness of Nykaa’s acquisition strategies.
The company also indicated its distribution business, Superstore by Nykaa, has witnessed GMV growth of 53% YoY and reached the significant milestone of Rs 1,000 crore GMV on an annualized basis this quarter. This reflects the company's strategic emphasis on enhancing its distribution capabilities.
Further analyzing performance metrics across the board, Nykaa's cumulative customer base for beauty reached 32 million, with the One Nykaa total at 40 million—indicating solid engagement and loyalty within its customer segments. The overall order volume growth of 30% YoY also aligns with the positive trends noted within the beauty sector.
To contextualize the competitive climate, shares of Nykaa have seen some pressure after reaching their 52-week peak, which was Rs 229.90 back in August 2024. Currently, the market capitalization stands below Rs 50,000 crore, prompting analysts to observe price dynamics closely as market conditions evolve. The previously mentioned stock price drop may also raise questions about investor confidence following the release of these results.
Digging even more deeply, the company’s strategy to leverage both its e-commerce and offline business models positions it well for the future. The continued investment in customer engagement initiatives, including successful marketing campaigns, ensures Nykaa adapts to both current market trends and consumer needs.
Overall, Nykaa's third-quarter fiscal report indicates robustness and strategic foresight as it navigates the competitive e-commerce and retail landscapes. The comprehensive financial growth across various segments forms a solid foundation for future developments, painting a promising picture for stakeholders and market observers alike.