Nykaa shares surge 11% in five sessions; here’s why

Shares of FSN E-Commerce Ventures, the parent company of fashion-to-jewellery e-retailer Nykaa, have been rising for the last few sessions amid hopes of strong demand in festive season as well as strong performance in the September quarter. Nykaa shares have maintained an uptrend for the last five sessions and gained nearly 11% during the same period.

On Tuesday, Nykaa shares opened higher at ₹151, up 2.4% over the previous closing price of ₹147.45 on the BSE. Extending opening gains, the stock gained as much as 4.9% to hit an intraday high of ₹154.65, while the market capitalisation rose to ₹43,090 crore.

At the day’s high levels, Nykaa, which made its market debut in November 2021, trades 31% lower than its 52-week high of ₹224.65 touched on November 11, 2022. The stock has risen over 35% from its 52-week low of ₹114.30 touched on April 26, 2023.

The largecap stock has delivered a negative return of 20% in the last one year, while it lost nearly 3% in the calendar year 2023. In the past six months, the stock jumped 17% whereas it added 2.5% in a month and 7% in a week. The stock has given a negative return of 62% since its debut on the stock exchanges in November 2021.

Nykaa shares got a boost today after the Falguni Nayar-led company reported a 50% rise in net profit at ₹7.8 crore in Q2FY24 from ₹5.2 crore in Q2FY23, primarily by the fashion business which witnessed a strong demand during the July-September quarter. Sequentially, the profit was up 44% from ₹5.4 crore reported in the June quarter of the current fiscal.

The revenue from operations of beauty and fashion e-retailer grew 22% to ₹1,507 crore in the quarter ended September 30, 2023, from ₹1,230.8 crore in the corresponding period last year. Quarter-on-quarter, the revenue climbed 6% from ₹1,422 crore in Q1FY24.

“This is despite the festive season witnessing a delay this year, moving into October versus commencing in September last year,” Nykaa says in its earnings report.

The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 32% YoY to ₹80.6 crore in Q2 FY24, while margin improved by 38 basis points to 5.4% in Q2FY24, on the back of both direct and indirect cost efficiencies.

The consolidated revenue from operations in the fashion business stood at ₹130.5 crore, registering a growth of 28% on a YoY basis. This was on the back of strong growth of 32% YoY in net sales value (NSV) NSV in Q2 FY24, led by an increase in annual unique transacting customer (AUTC) which grew at 30% YoY to 2.8 million as on September 30, 2023.

Meanwhile, new businesses at Nykaa, which includes Superstore by Nykaa, witnessed NSV of ₹98.6 crore for the quarter, growing at 105% on a YoY basis. Superstore business scaled up to serving almost 1.3 lakhs transacting retailers across 770 cities as on September 30, 2023.

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