Shares of FSN E-Commerce Ventures Ltd (Nykaa) surged about 6 per cent during the trading session on Wednesday after the company announced a strong set of numbers in the December 2023 quarter. However, brokerage firms are mostly mixed on the company despite decent earnings. Nykaa's net profit nearly doubled in the December 2023 quarter. It clocked a consolidated net profit of Rs 16.2 crore for the quarter ended October-December 2023 period, which was up 97 per cent on a year-on-year (YoY) basis from Rs 8.2 crore in the year ago period. Revenue from operations of Nykaa jumped 22 per cent YoY to Rs 1,789 crore in the reporting third quarter as against Rs 1,463 crore in the corresponding quarter of previous year. Ebitda for the quarter increased 26 per cent YoY to Rs 98.9 crore in the given quarter, with Ebitda margins coming in at 5.5 per cent. The gross merchandise value (GMV) for the quarter rose 20 per cent YoY to Rs 761 crore. The consolidated beauty and personal care (BPC) GMV witnessed a growth of 25 per cent YoY, while net sales value (NSV) growth stood at 20 per cent YoY primarily due to higher discounting by brands in mass and masstige segment. Nykaa posted in-line revenue growth, aided by 25 per cent YoY growth in BPC GMV and 40 per cent YoY growth in fashion GMV. Consolidated GM print of 42.5 per cent was down 58 basis points (bps) quarter-on-quarter (QoQ) due to higher discounting and lower advertising income, said Kotak Institutional Equities. "BPC contribution margin declined 225 bps QoQ to 21.9 per cent, but fashion CM improved significantly 247 bps QoQ to 10.7 per cent. The FY2024 EPS cut is sharp, though the FY 2025-26 EPS cut is lower, as we expect loss reduction in eB2B. Roll-forward to March 2026 leads to a revised DCF-based fair value of Rs 165 from Rs 170," it added while maintaining 'add' rating. Following the announcement of Q3 results, shares of FSN E-Commerce Ventures jumped 5.95 per cent to Rs 170.05 on Wednesday, commanding a total market capitalization close to Rs 48,000 crore. The scrip had settled at Rs 160.50 in the previous trading session on Tuesday. Nykaa reported a stable showing with growth sustaining after Q2FY24 with BPC/Fashion reporting NSV growth of 20 per cent/31 per cent. Overall Ebitda margins were in line at 5.5 per cent and saw a 20 bps YoY improvement. There was an impact of 60 bps from ESOP and GCC expansion, which shall continue. Nykaa highlighted that focus remains on accelerating growth," said Nuvama. "Contribution from own brands improved 30 per cent YoY taking its share in GMV to 12 per cent. Gross margins for fashion segment improved to 77 per cent. However, fulfilment and marketing spends remained elevated. Overall, the fashion business saw a decent improvement in contribution margin to 11 per cent versus 1 per cent in Q3FY23," it added with a target price of Rs 189. Another domestic brokerage Elara Capital has maintained 'accumulate' rating on Nykaa and slashed its target price to Rs 185, while HSBC has maintained 'buy' but cut its target price at Rs 240. Jefferies has kept its 'buy' intact on Nykaa but trimmed target price to Rs 210. Morgan Stanley maintains overweight with revised target price of Rs 190.
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