FSN E-Commerce Ventures Ltd, parent of online fashion retailer Nykaa, reported a 61 per cent surge in its net profit for the December quarter on nearly 27 per cent rise in net sales. Ebitda margins expanded 70 basis points to 6.2 per cent. The revenue and Ebitda margin came in better than expected, but net profit fell short of analyst expectations. Overall, Nykaa delivered broad-based earnings, with all businesses reporting double-digit growth.
"We forecast core BPC to sustain margin improvement driven by operating leverage despite contribution margin remaining largely flat at 9MFY25 levels. Nykaa’s ability to deliver robust growth in a tepid demand environment demonstrates its differentiated market positioning. Retain ‘BUY’ with March 2026 target of Rs 240," said JM Financial.
Nuvama said the management’s efforts to reduce losses and improve overall profitability are showing results. It said the improvement in consolidated Ebitda margin improved was due to a reduction in losses in Fashion and eB2B. Contribution margin for BPC segment improved 20 bps YoY to 19.4 per cent while gross margin expanded 80 bps YoY to 39.7 per cent. On the other hand, contribution margin for fashion segment improved 230 bps YoY to 14.5 per cent, led by improved gross margin of 80 bps YoY to 39.7 per cent.
"We continue to forecast strong growth in the BPC segment, although we are watching revenue growth suitability in fashion segment due to increasing competitive intensity. We continue to expect improvement in profitability on the back of lower losses in fashion and eB2B segment," Nuvama said.
The domestic brokerage has cut its FY25 and FY26 earnings estimates by 6.8 per cent and 9 per cent, respectively, higher tax assumptions and expected drop in other income. It continued to value Nykaa using DCF, yielding an unchanged target price of Rs 205.
Nykaa reported GMV growth of 25 per cent YoY, led by Beauty GMV growth of 32 per cent YoY. Fashion GMV grew 8 per cent YoY. Consolidated revenue grew faster than GMV at 27 per cent YoY, with Beauty segments’ revenue growing 27 per cent and Fashion revenue at 21 per cent YoY.
"Revenue growth in Fashion was faster than GMV due to strong performance by LBB (marketing income) and higher services-related income. BPC business annual unique transacting customers (AUTC) increased 26 per cent YoY to 14.8 million while number of orders surged 30 per cent YoY to 15 million. AOV remained flat YoY at Rs 2,127," Nuvama said.
Fashion AUTC grew 4 per cent YoY while orders remained flat YoY at 2.1 million. Fashion AOV grew 5 per cent YoY to Rs 4,901, driven by management efforts of assortment building. eB2B GMV grew 53 per cent YoY to Rs 260 crore, whereas cumulative transacting retailers grew 52 per cent YoY to 256k across 1,100 cities.