BackNykaa Q2 Results Preview: Net profit likely to double YoY; revenue growth seen at 23% led by higher GMV
Nykaa’s gross merchandise value (GMV) during the quarter under review is likely to grow by 24% YoY led by BPC segment growth estimated at 21% and Fashion segment growth at 25% YoY.
PremiumFSN E-Commerce Ventures, the operator of omnichannel beauty and fashion retailer Nykaa, will today announce its financial results for the quarter ended September 2023.
Nykaa is expected to report strong earnings growth in the second quarter of FY24 with net profit more than doubling on an year-on-year basis, while revenue seeing a decent rise driven by uptick in the beauty and personal care (BPC) segment.
However, with the festive season completely in the third quarter this year compared to partly in Q2 last year, the growth in Nykaa’s BPC segment would be limited, analysts said. Moreover, the Fashion segment is estimated to deliver strong growth amid some green shoots.
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Nykaa’s net profit in Q2FY24 is expected to jump 136% to ₹9.7 crore from ₹4.1 crore in Q2FY23, as per analysts’ estimates.
The company’s revenue in the quarter ended September 2023 is estimated to grow 23.33% to ₹1,518 crore from ₹1,230.8 crore in the corresponding quarter of last year.
Nykaa’s gross merchandise value (GMV) during the quarter under review is likely to grow by 24% YoY led by BPC segment growth estimated at 21% and Fashion segment growth at 25% YoY.
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The company’s operating performance is expected to improve in Q2FY24 driven by positive operating leverage. Earnings before interest, taxes, depreciation and amortization (EBITDA) is estimated to grow 44% to ₹88 crore from ₹61.1 crore, YoY.
EBITDA margin may improve by 80 basis points (bps) to 5.8% in Q2FY24 from 5% led by optimisation and lower costs.
In its Q2 business update, Nykaa said it expected its consolidated net sales value (NSV) to grow in the mid-twenties and revenue to grow in the early twenties on YoY basis in Q2FY24.
“Our BPC business NSV for the quarter is expected to grow around twenty percent on YoY basis… Within the quarter, Nykaa Fashion has optimized the core category mix along with improvement in order volumes. Fashion NSV for the quarter is expected to grow in early thirties on YoY basis," FSN E-Commerce Ventures had said in a regulatory filing on October 7.
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Brokerage firm JM Financial expects Nykaa’s overall GMV to grow by 23% YoY (8.2% QoQ), led by BPC at 18.9%/4.7% YoY/QoQ, Fashion at 27.9%/17.2% YoY/QoQ and Others at 56.1%/11.4% YoY/QoQ.
“We anticipate revenue to grow at 22.2%/5.8% YoY/QoQ. We expect EBITDA margins to improve by 44 bps QoQ led by the benefit coming from regional warehouses lowering fulfilment costs, optimisation of marketing costs and optimisation of category mix in Fashion," JM Financial said.
According to the brokerage firm, this improvement is slender as the business mix of higher margin BPC is lower this quarter, however, it forecasts improving trends in the upcoming months.
Kotak Institutional Equities reckons revenue growth of 24% and 7% YoY and QoQ, primarily driven by BPC revenue growth of 23 and 6% YoY and QoQ and fashion business revenue growth of 22% and 9% YoY and QoQ. It expects an improvement in EBITDA margin to 5.9%, driven by positive operating leverage.
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The industry estimates indicate slightly subdued discretionary consumption, primarily on account of a delayed festive season.
“In contrast, Nykaa has witnessed a strong quarter across all verticals. We expect revenues to increase 24% YoY to ₹15.3 billion. Our EBITDA estimate is higher YoY despite the slowdown, factoring the efficiency in fulfillment and marketing costs. We build in an EBITDA margin of 5.9% with EBITDA at ₹900 million, up 47% YoY," Nuvama Institutional Equities said.
Nykaa share price has fallen 2% in one month, while the stock is over half a percent down in three months. Nykaa shares have fallen over 5% year-to-date (YTD), while they have slipped more than 20% in the past one year.
At 12:05 pm, Nykaa shares were trading 4.31% higher at ₹146.35 apeice on the BSE.
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