Nykaa, a prominent beauty and fashion ecommerce player, reported in its Q3 FY24 performance update that it experienced steady growth across all three of its business verticals throughout the quarter.
Nevertheless, the Falguni Nayar-led company also stated that, despite improvements in long-term macro indicators, discretionary consumption was impacted during the quarter due to short-term pressures.
After Nykaa’s exchange filing on Sunday (January 7), there was nearly a 5% surge in its shares, reaching INR 182 during Monday’s intraday trading hours. However, by 2.45 PM IST, the shares moderated their gains to trade 2.5% higher at INR 177.7 on the BSE.
Building on the positive momentum of the preceding quarter, the company reported robust growth for Nykaa Fashion in the current quarter.
The company projected that the gross merchandise value (GMV) of the fashion vertical in Q3 FY24 is anticipated to increase by approximately 40%, while the net sales value (NSV) is expected to exhibit year-on-year (YoY) growth in the low thirties.
The GMV for the fashion vertical in the previous year’s quarter, Q3 FY23, amounted to INR 724.4 Crores, while its net sales value (NSV) stood at INR 210 Crores.
Despite facing challenges in Q3 FY23, Nykaa Fashion has been gaining momentum since the previous quarter. In Q2 FY24, its GMV recorded a YoY growth of 27%, reaching INR 762.8 Crores, while the NSV surged by 32% YoY to INR 232.1 Crores.
In contrast, Nykaa’s beauty and personal care (BPC) business continued to face challenges. The company projected that the GMV growth for the BPC vertical in Q3 FY24 would be in the mid-twenties, with NSV growth expected to be around 20% on a year-on-year (YoY) basis.
In the corresponding period a year ago, during Q3 FY23, the GMV for the beauty and personal care (BPC) vertical amounted to INR 1,901.4 Crores, with the NSV reaching INR 1,151.3 Crores.
Against a backdrop of sluggish growth in this segment, Nykaa reported a GMV of INR 1,850.8 Crores and an NSV of INR 1,167.5 Crores for the beauty and personal care (BPC) segment in its most recent quarter, Q2 FY24.
“We believe Nykaa’s BPC growth for the quarter is ahead of industry growth. However, we believe current industry growth is below long-term trajectory and should revert to the median in the near to mid-term, given the strong macroeconomic and demographic outlook,” said Nykaa.
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Furthermore, the company mentioned that the variance in Gross Merchandise Value (GMV) and Net Sales Value (NSV) growth within the BPC business for the quarter was primarily due to brand-led pricing and discounting, especially in mass and masstige categories. The sustained and robust growth in underlying order volume reflects consistent and strong customer demand.
Anticipated Boost in Q3 FY24 Due to Festive Season for Nykaa
It’s important to highlight that Nykaa is anticipated to receive a boost in Q3 FY24, given that the festive season coincided with this quarter.
Meanwhile, the third vertical, Superstore By Nykaa, has experienced significant growth and currently commands a meaningful share in the company’s overall NSV, as stated by Nykaa.
“For Q3 FY24, at a consolidated level, we expect our NSV to grow in the mid-twenties and revenue to grow in the low twenties on a YoY basis,” the company added.
In Q3 FY23, Nykaa reported an overall Gross Merchandise Value (GMV) of INR 2,796.5 Cr and an operating revenue of INR 1,462.8 Cr. However, Nykaa’s consolidated net profit declined by 70.7% YoY to INR 8.5 Cr in the corresponding quarter of the previous year.
Nykaa’s profit in Q2 FY23 stood at INR 7.8 Cr.
