FSN E-Commerce Ventures Ltd-operated online beauty & personal care company Nykaa reported a 344% rise in its net profit for Q2FY23 despite a rise in tax expense, to Rs 5.2 crore versus Rs 1.2 crore seen during the same quarter previous year.
The online lifestyle retailer also saw a growth of 45% in its gross merchandize value (GMV) to Rs 2,345 crore on a y-o-y basis. Revenue from operations for the period under review rose 39% to Rs 1,230.8 crore against Rs 885.3 crore in Q2FY22.
On the operational front, Nykaa’s Ebitda (earnings before interest, taxation, depreciation and amortization) margin rose 170 basis points on back of efficiency in fulfilment and marketing costs. Margin for the quarter-ended September came rose to 5% from 3.3% y-o-y with absolute Ebitda rising more than doubling to 61.2 crore compared to Rs 28.9 crore in Q2FY22. The rise in the company’s operational profit can be mainly attributed to higher finance costs and depreciation seen during the quarter.
Street hailed Nykaa’s Q2 review as the stock was trading with gains of 3.9% at Rs 1,198 apiece in last-hour trade on the National Stock Exchange Tuesday.
The mild intra-day uptick, however, may be little respite in stock price terms for the digital retailer after it suffered a significant decline this FY amid a rout in share prices of new age companies listing on public markets through H2FY22 and FY23 so far. Nykaa continues to trade at a discount of 41% on a year-to-date (YTD) basis but remains mildly buoyant above its issue price of Rs 1,125.
Segmentally, Nykaa’s beauty and personal care (BPC) segment saw a margin expansion of 630 basis points during Q2 along with a 39% growth in GMV y-o-y. Orders also grew 39% to Rs 84 lakh.
The fashion vertical’s GMV contributed 26% to the company’s consolidated GMV during the quarter with the annual unique transacting customers in the segment growing 66% y-o-y.
While majority shareholding in the company lies with the Sanjay Nayar and Falguni Nayar family offices, Nykaa also counts investors such as Kravis Investment Partners, Fidelity, Lighthouse, TPG and Steadview Capital under its captable umbrella.
“Our business has delivered sustainable, while investing in capabilities for the future. Our online and offline presence in beauty has delivered strong growth with improving margin. There has been structural improvement in fulfilment costs as we move to regional warehouses. Consumer demand for premium beauty, personal care and wellness is showing signs of buoyancy as we gear up for a promising H2 FY23,” said Falguni Nayar, chairperson, managing director and chief executive officer of Nykaa.
Our focus on curation and discovery in Fashion is evident, as new season merchandise accounted for 24% of Nykaa Fashion GMV; international brands are at 13% of western wear category GMV in Q2. We are investing in growth engines of the future, particularly SuperStore by Nykaa. The International business which includes the venture we have with the Apparel Group in the GCC, is promising,” she added.
