FSN E-Commerce Ventures Ltd, the parent company of Nykaa, released its business update for the fiscal fourth quarter with consolidated net revenue expected to rise in the low to mid-20 per cent range on YoY basis. This, according to a regulatory filing, brings the company’s full year revenue growth also in the mid-20s, reflecting consistent performance across all quarters of the financial year.
Nykaa said that the Gross Merchandise Value (GMV) growth of the beauty vertical is expected to remain significantly ahead of the industry at low thirties. Some of the drivers of this growth include, investments in customer acquisition over the past several quarters leading to consistent order volume growth; strong retail performance supported by same store sales growth (SSSG) as well as accelerated expansion of the retail network with 19 stores rolled out in Q4FY25; and growing success of House of Nykaa, through strong performance of both home‐grown as well as acquired brands. “Nykaa’s beauty vertical has thus maintained its robust momentum from previous quarters with net revenue growth in the mid‐twenties,” it said.
Meanwhile, the fashion vertical is expected to post GMV growth in high teens, with sequential improvement in core platform business. The net revenue growth is expected to be lower due to muted performance of Nykaa Fashion owned brands and lower content related activity in Q4FY25, which typically peaks in the third quarter.
What are brokerage firms saying?
Per analysis by Nuvama Institutional Equities, for the fiscal fourth quarter, Nykaa is expected to report 29 per cent growth in BPC segment Gross Merchandise Value (GMV) and 10 per cent growth for the fashion segment. Overall, it said, revenue is estimated to post a rise of 25 per cent YoY to Rs 20.1 billion. EBITDA margin is expected to increase 10bps QoQ to 6.3 per cent in Q4FY25, it added.
HDFC Securities said, “Nykaa remains an efficient online business, especially for BPC. Fashion remains a WIP. Post a two-year time correction, valuations now seem palatable. If one were to value the core BPC at 39x FY27 EV/EBITDA, then we are effectively paying only for the core online BPC business, while fashion and eB2B business remain optional values.”
Going forward, HDFC Securities maintained that Nykaa’s core BPC online AUTC/orders are likely to grow at 20 per cent / 21 per cent CAGR along with rising order frequency over FY25-27E. “Teething issues in its new ad tech stack now seem to have settled. Ergo, ad/shipping income (non-linear) which bottomed out in FY24 is normalizing upwards (8.6 per cent to 9.8 per cent of NSV in 9MFY25). What is more encouraging is that despite the step-up in customer acquisition (core online BPC), purchase frequencies, AOVs and customer engagement have only improved.”
On the fashion segment, it added, the losses continue to ebb with improving AOVs, take rates, and higher other income. “If one were to value the core BPC at 39x FY27 EV/EBITDA, then we are effectively paying only for the core online BPC business, while fashion and eB2B business remain optional value,” the brokerage firm said.
Shares of Nykaa dropped by 2.77 per cent at 10:00 am to a trading price of Rs 171.95.