Nykaa shares plunge 11% post Q1; here’s why

Shares of FSN E-Commerce Ventures, the parent company of Nykaa, nosedived over 11% in intraday trade on Monday after the Falguni Nayar-led company reported disappointing earnings in June quarter of the current financial year. The beauty and fashion e-retailer on August 11 released its Q1 FY24 results, which showed that its consolidated net profit attributable to equity shareholders of parent fell 27% to ₹3.3 crore as compared to ₹4.55 crore in the same period a year ago. However, its consolidated net profit grew 8% to ₹5.4 crore in Q1 FY24, from ₹5 crore in the year-ago period.

The revenue from operations rose 24% to ₹1,421.8 crore during the quarter under review, as compared to ₹1,148.4 crore in the corresponding period a year ago.

On the operating front, the EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) jumped 60% YoY to ₹73.5 crore, while EBITDA margins improved by 116 basis points to 5.2%.

Reacting to Q1 results, Nykaa shares opened marginally lower at ₹145.90 against the previous closing price of ₹146.25 on the BSE. During the session, the stock declined as much as 11.1% to ₹130, while the market capitalistion slipped to ₹38,863 crore. The counter witnessed strong volume as nearly 10 lakh shares changed hands on the BSE compared to the two-week average of 3.63 lakh stocks.

Nykaa, which made its market debut in November 2021, trades 45% lower than its 52-week high of ₹237.98 touched on August 12, 2022. The stock has risen nearly 14% from its 52-week low of ₹114.30 touched on April 26, 2023. It has delivered a negative return of 42% in the last one year, while it has fallen over 12% in the calendar year 2023. In the past six months, the stock has lost 5% whereas it tumbled over 6% in a month and 8% in a week.

For Q1 FY24, the overall gross merchandise value (GMV) grew 24% YoY to ₹2,668 crore, while the contributing margin improved to 20.7% from 20.2% in the same period last fiscal. The fashion segment's GMV rose 12% YoY in Q1 FY24, while the GMV of the beauty and personal care business grew by 24% during the quarter.

As per the company, the physical retail space expanded by 43% YoY with 152 stores as of June 30, 2023.

“Our beauty vertical continues to shape into an ecosystem of its own – with steady and balanced growth across our online platforms, physical footprint as well as our consumer brands. Fashion’s consumer brands also experienced steady growth with our own labels now spanning across categories – western wear, Indian wear, lingerie, menswear, accessories and much more. Nykaa Fashion’s growth in the quarter was much ahead than the industry growth but below its long-term trajectory," said Falguni Nayar, MD, and CEO, Nykaa.

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