FSN E-Commerce Ventures Ltd (Nykaa) reported subdued September quarter results, with revenue growth at 24.4 per cent YoY coming in line with the consensus estimate. BPC (Beauty Personal Care) and Fashion segments reported net sales value (NSV) growth of 25 per cent and 13 per cent YoY; and Ebitda margin was similar to last quarter at 5.5 per cent against a consensus estimate of 6.1 per cent. Profit after tax at Rs 13.40 crore was lower than the consensus forecast of Rs 24.70 crore, Nuvama said.
"Growth in the fashion business continues to remain subdued due to overall slowdown in the industry as well as shifting of festive purchases to H2 compared with last year. Marketing spends remain elevated to support overall growth although at cost of margins," it said.
The brokerage has cut its FY25, FY26 and FY27 PAT estimates by 8.2 per cent, 8 per cent and 8.7 per cent, respectively. It retained ‘Buy’ on the stock and continued to value Nykaa using DCF, yielding a target price of Rs 205 against Rs 220 earlier.
Nykaa reported GMV growth of 24 per cent YoY, led by Beauty GMV growth of 29 per cent YoY while Fashion GMV increased 10 per cent YoY.
"Consolidated revenue grew similar to GMV at 24 per cent YoY with beauty segments’ revenue growth of 24 per cent while Fashion revenue grew 22 per cent YoY. GMV of beauty owned brands surged 48 percent YoY, contribution of other online marketplace increased from 13 per cent in FY24 to 21 per cent in Q2FY25," Nuvama said.
Revenue growth in fashion was faster than GMV due to strong performance by LBB (marketing income) and higher services related income, it said.
The BPC business' Annual Unique Transacting Customers (AUTC) inched up 21 per cent YoY to 13.7 million while number of order grew 24 per cent YoY. AOV was up 2 per cent YoY at Rs 2,038. In the case of Fashion, AUTC grew 7 per cent YoY while orders stayed flat YoY to 1.8 million. Fashion AOV grew 10 per cent YoY to Rs 4,464.
Overall, Nykaa's consolidated Ebitda margin improved 10 bps YoY to 5.5 per cent. Adjusted EBITDA margin came in at 6.2 per cent, up 70 bps YoY, after adjusting for ESOP expenses, GCC and organisational restructuring expenses.
"We reckon an improvement in growth in H2 on the back of higher festive and wedding demand. We continue to forecast an improvement in profitability on the back of operative leverage, although we have moderated our expectations due to elevated marketing spends," Nuvama said.