Nykaa shares positive FY23 business update; brokerages see over 50% upside

Beauty e-retailer Nykaa shared its business update on Wednesday stating that the revenue growth trends displayed are healthy for FY23 and expects to sustain its percentage growth rate in line with 9MFY23.

According to the company, BPC (Beauty and personal care) business has seen higher year-on-year growth rates in Q4 FY23 compared to the year-on-year (YoY) growth rates seen in Q3FY23. The operating parameters for the BPC business – average order values and conversion rates – have been robust which has aided growth in revenue, it said and added that the ‘Pink Love’ sale introduced by the Nykaa during Q4FY23 also partly helped the segment sustain strong demand.

Also Read: Nykaa Q4 update: Revenue growth to be in line with first nine months of FY23

In its Fashion segment, the company expects percentage revenue growth rates to come through in the late teens on the back of focusing on business efficiency and unit economics.

“For FY23, we expect our percentage revenue growth rates to be in line with the ones seen in 9-month FY23, early-thirties,” as per the company statement.

For the 9-month period, Nykaa’s GMV grew 42 percent YoY to Rs 7,298 crore while revenue grew 37 percent YoY to Rs 3,842 crore. Profit came in at Rs 19 crore, a decline of 45 percent YoY. On a quarterly basis, Q3FY23 saw net profit declining 71 percent YoY to Rs 9 crore. Revenue increased 33.2 percent at Rs 1,463 crore against Rs 1,098 crore in Q3FY22. EBITDA (Earnings before interest, taxes and depreciation) stood at Rs 78 crore, up 13.5 percent YoY compared to Rs 69 crore in Q3FY22 while EBITDA margin declined to 5.4 percent compared to 6.3 percent in Q3FY22.

Also Read: What is causing the sudden rebound in Nykaa? Is the worst over?

Research firm, Morgan Stanley has an overweight call on the stock at a target price (TP) of Rs 206, implying a 51 percent upside over the closing price on March 5. On a consolidated Level, Q4 revenue growth has been healthy and sustained demand from Tier-1 consumers has led to stronger revenue growth, it said.

Foreign brokerage Nomura also has a ‘buy’ call on the company at a target price of Rs 214, implying an upside potential of 57 percent over current levels.

Earlier, Jefferies had maintained its target price at Rs 200 after the company saw a flurry of executive exits on March 24 and highlighted that they do not see a big disruption or a major change in strategy.

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At 9.55 a.m., the scrip was trading 3.15 percent lower on the NSE at Rs 131.80 while the benchmark Nifty was trading at 0.26 percent low at 17,510.05 points.

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