With FSN E-Commerce Ventures, the parent of online beauty and fashion brand Nykaa, all set to release its fiscal third quarter earnings on Monday (February 10), brokerage firms and analysts said that the company is expected to record significant improvements in its numbers in Q3, both sequentially and on YoY basis. The online company is expected to record growth in revenue from operations in the range of 27- 34 per cent to approximately Rs 2405.30 crore with a strong performance in the beauty vertical, while the fashion segment continued to remain subdued. Profit is estimated to more than double from the previous year to Rs 46.6 crore. During the second quarter of the current fiscal year, Nykaa had recorded a profit of Rs 13 crore and revenue was reported at Rs 1874.7 crore. Per analysts, Q3 will be a seasonally strong quarter for Nykaa led by wedding dates advancing to Q3 from Q2.
Earlier on January 30, FSN E-Commerce Ventures had, in a regulatory filing, announced that the company will release its fiscal third quarter results on February 10. “This is to inform you that a meeting of the Board of Directors of the Company is scheduled to be held on Monday, February 10, 2025 to, inter-alia, consider and approve the Unaudited Standalone and Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2024, along with the Report of the Statutory Auditors thereon,” it had said.
In its Q3 business update, Nykaa had maintained that the company is expected to witness strong performance during the quarter with consolidated net revenue growth likely to be higher than mid-twenties. Nykaa’s revenue growth is higher than the consolidated GMV growth for the same period, indicating positive trend in GMV to net revenue translation. While maintaining that the beauty vertical has accelerated vs previous quarters with net revenue growth higher than mid-twenties, it had said that the online fashion demand continued to be subdued. However, Nykaa remained optimistic about the long-term growth opportunity.
According to JM Financial, Nyka is expected to post core BPC GMV growth of 27 per cent YoY, assuming eB2B + Nykaa Man GMV grows at 66 per cent. “We bake in Fashion NSV growth of 14 per cent YoY amidst a muted demand environment, however, the company continues to gain market share in this segment too. Net revenue growth is expected to be higher at around 20 per cent, reflecting sustained growth in content and marketing related income through LBB. Overall, we anticipate Nykaa to deliver 27 per cent/ 22 per cent YoY/QoQ growth in revenue. Core BPC gross margin (as a % of NSV) is expected to dip 60bps QoQ to reach 45.7 per cent due to investments in customer acquisition, with a similar dip in contribution margin as well. However, with topline growing 21 per cent QoQ and costs below CM unlikely to rise commensurably, Nykaa BPC segment is still destined to report stable sequential EBITDA margin,” the brokerage firm said. Per estimates by JM Financial, Nykaa is expected to record Q3 revenue at Rs 2279.60 crore, posting a growth of 27.4 per cent YoY and PAT is projected at Rs 37.10 crore recording a 2.3x growth YoY. The company GMV is estimated at Rs 4535.30 crore, up 25.4 per cent YoY.
Elara Capital too projected a strong performance by the company due to the festival and weddings seasons. Per an analyst report by Elara Capital, Nykaa’s BPC GMV may grow 35 per cent YoY led by a) a 32 per cent YoY rise in the number of wedding dates in H2, and b) QoQ recovery in demand. GMV for Fashion is expected to grow 20.0 per cent/ 45.5 per cent YoY/QoQ with strong sequential recovery. “Ad revenue may support overall revenue growth in Q3E. Nykaa’s consolidated EBITDA margin may improve 80bps QoQ to 6.3, led by a) better ad revenue in BPC and b) lower operating losses in fashion,” it said. Per Elara Capital, Nykaa is expected to record Q3 revenue at Rs 2405.30 crore, posting a growth of 34.5 per cent YoY and adjusted net profit is estimated at Rs 46.6 crore, up 155.7 per cent on-year. The EBITDA is projected at Rs 152.20 crore, up 54.1 per cent YoY.
FSN E-Commerce Ventures currently has its share price at Rs 173.5.
Here are things to watch out for as Nykaa will announce its Q3 earnings report on February 10:
– Investors and market participants will keep an eye on management commentary on industry trends in BPC/Fashion, competitive landscape and continued supply chain investments.
– Another monitorable will be announcements around national and international plans, which will be keenly watched.
– While releasing its Q2 report, Nykaa had announced that it will soon begin delivery of some of its products in 30 minutes to 3 hours from the time of placing the order. Anchit Nayyar, ED and CEO – beauty e-commerce, FSN E-commerce, had said that ‘Nykaa Now’ can execute 30-minute to 3-hour deliveries for certain products profitably, without a large capex infusion. Commentary on this front will also be awaited.
– Other key monitorable will be key reasons for the possible revenue and profit growth and contribution from the fashion vertical.