
FSN E-Commerce Ventures, the parent company of Nykaa, is set to announce its results for the period ended on March 31, 2023, on Wednesday and analysts expect the company to report a good set of numbers in the seasonally weak quarter for the company with some tailwinds. According to market analysts, discretionary spending remained subdued in 4QFY23 with continued interest rate hikes and heightened inflation, which may reduce demand for select companies. Nykaa may see a weaker sequential performance post the festive quarter, they said. Brokerage firms have a mixed view on Nykaa's earnings but expect the company's EBITDA to expand 120-150 basis (bps) on a year-on-year (YoY) basis. The company may report a fall in revenue and EBITDA on a quarter-on-quarter basis (QoQ) even after margin expansion. The analysts see an increase in gross merchandise value (GMV) in the beauty and personal care (BPC) segment. JM Financial expects Nykaa to report a revenue at Rs 1,283.2 crore, a 31.8 per cent YoY rise but a fall of 12.3 per cent QoQ. Its EBITDA is seen at 69.8 crore, increasing 81.1 per cent YoY, but down 10 per cent QoQ with an EBITDA margin at 5.4 per cent, expanding 148 bps YoY. PAT is likely to fall about 65 per cent on both YoY and QoQ basis at Rs 2.9 crore. The brokerage expects GMV to grow 35 per cent YoY with growth driven by Pink Love Sale in February. It also expects BPC GMV to grow 30 per cent YoY driven by robust average order values (AOV) and better customer conversions while Fashion is expected to deliver 29 per cent YoY growth on a smaller base. It has a 'buy' rating on the stock with a target price of Rs 230. "We anticipate Nykaa to deliver 35 per cent and 32 per cent YoY growth in GMV and revenue, respectively. Company-wide lowering of fulfilment costs from regional centres and business mix shifting towards higher margin BPC, we expect overall EBITDA margin to improve 10bps sequentially and 148bps YoY," JM Financial added. Shares of Nykaa were trading about 2 per cent down at Rs 126 on Wednesday. The stock is down about 51 per cent from its adjusted 52-week high at Rs 257.66 on June 1, 2022. The stock is down more than 25 per cent in the last six months and down about 20 per cent in the year 2023 so far. According to ICICI Securities, Q4 is historically a weak quarter for Nykaa. Nykaa may report a revenue at Rs 1,278.1 crore, while EBITDA of Rs 66.7 crore with an EBITDA margin of 5.2 per cent, expanding 126 bps YoY. PAT is seen at Rs 8.9 crore, it said. Q4FY23E also experienced online consumption fatigue. In our view, the management’s decision to activate a new sale event in Q4FY23E was to counter these headwinds. "We estimate overall GMV to grow 38 per cent YoY and 11.3 per cent QoQ led by 30 per cent YoY GMV growth in the BPC segment and 43% YoY growth in the fashion segment," said ICICI Securities. Overall, its estimated revenue growth of 31.3 per cent YoY in Q4FY23 and believe cost control measures are likely to aid EBITDA margin expansion of 120bps YoY. We estimate EBITDA to grow 73 per cent YoY and PAT to grow 4 per cent YoY. ICICI Securities has an 'add' rating on the stock with a target price of Rs 165 apiece.
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