Nykaa shares: Nuvama ups target price on stock post Q1 results, says this

FSN E-Commerce Ltd (Nykaa) has reported 152 per cent year-on-year (YoY) rise in net profit for the June quarter, slightly missing analyst estimates. A 22.8 per cent growth in revenue was in line with consensus estimates. Nuvama Institutional Equities expects sales and marketing expense to remain range-bound going ahead, as the company focuses on profitable growth. Operating leverage would be the key margin lever going forward, the brokerage said.

Nuvama said Nykaa delivered a strong growth in BPC but Fashion segment's gross merchandise value (GMV) growth missed expectations due to a slowdown in the underlying market. Margin improved YoY largely due to Fashion and B2B, it said as the domestic brokerage tweaked its FY25 and FY26 PAT estimates by about 2 per cent each.

Nykaa shares are up 40 per cent in the past one year. Nuvama rolled over its DCF value to March 2026 and arrived at a revised target price of Rs 220 for Nykaa against Rs 203 earlier.

The brokerage said sales for Nykaa at about Rs 1,750 crore came in line with estimate. Ebitda margin improved 30 basis points YoY to 5.5 per cent, while adjusted Ebitda margin came in at 6.2 per cent (up 90 bps YoY) after adjusting for the GCC segment and restructuring cost.

"Nykaa’s BPC GMV/NSV jumped 28 per cent /21 per cent YoY driven by a 25 per cent uptick in orders. BPC business exhibits decent traction with Annual Unique Transacting Customers (AUTC) rising 20 per cent YoY to 13.1mn. AOV remained flat YoY at Rs 1,924. Owned brands’ GMV shot up 47 per cent YoY with the share of BPC’s GMV rising 180 bp YoY to 13.4 per cent in Q1FY25. Contribution margin for the segment contracted 100 bps YoY to 20 per cent with gross margin decreasing 50bp YoY to 39.7 per cent," Nuvama said.

In the case of Fashion segment, a 15 per cent YoY GMV growth was reported, with net sales value (NSV) growth at 17 per cent YoY, impacted by weaker growth in Indian wear as a category since there were no festivals in Q1.

Contribution from own brands contracted 1.9 percentage points YoY, taking share in GMV to 11.7 per cent. Gross margin of the fashion segment improved to 81 per cent against 78 per cent in Q4FY24, and contribution margin improved to 17 per cent during Q1FY25 against 14 per cent in Q4FY24.

Orders increased 13 per cent YoY to 1.7 million and average order value (AOV) 4 per cent YoY to Rs 4,237.

Nykaa acquired additional 39 per cent stake in Dot and Key for a consideration of Rs 265 crore, taking its stake in the company to 90 per cent. Additionally, it acquired further stake in Earth Rhythm for a consideration of up to Rs 44.50 crore, thereby making Earth Rhythm a subsidiary of Nykaa.