Nykaa climbs 6% after net profit jumps 363% YoY to Rs 5 crore in Q2FY23

Shares of FSN e-Commerce Ventures, parent firm of Nykaa, surged 6.5 per cent to Rs 1,233 per share in Tuesday’s intra-day trade, after the company’s net profit jumped 363 per cent year-on-year (YoY) to Rs 5.1 crore in the July-September quarter (Q2FY23) from Rs 1.1 crore in the year-ago period.

At 1:15 pm, shares of Nykaa traded over 3 per cent higher at Rs 1,203 apiece, as against 0.2 per cent rise in the S&P BSE Sensex. In the past seven sessions, the stock has climbed 0.5 per cent as against 2 per cent gain in the S&P BSE Sensex.

The Indian cosmetic-to-fashion retailer’s total income, meanwhile, climbed 39 per cent YoY to Rs 1,237.3 crore in Q2FY23 from Rs 890.4 crore in Q2FY22.

Total expenses, too, grew 38 per cent YoY to Rs 1,228.5 crore in the recently concluded quarter.

Since Nykaa is India’s largest player in the online beauty-to-personal care (BPC) segment, analysts at Nomura believe that the company’s expansion into fashion and increased focus to curate brands bodes well for the company.

“With high medium-term growth potential and unique positioning, we believe risk-reward is quite favourable for long term investors with potential for the stock to double over the next 5 years. We foresee around ~18 per cent revenue CAGR for FY25-40F (~34 per cent online BPC market share), with EBITDA margin stabilising at ~18 per cent,” the brokerage firm said in a recent report, with a ‘buy’ rating, and a target price of Rs 1,365 per share.

Earlier, on September 9, 2022, the company had acquired complete stake in Illuminar Media Private Limited (LBB) for Rs 29.2 crore, in order to strengthen its content delivery, drive discovery of brands, and make shopping experience customer-friendly.

Analysts at ICICI Securities assert that Nykaa’’ investments in differentiated value proposition of content, curation, and convenience will yield strong results. “We model revenue and EBITDA CAGRs of 42 per cent and 90 per cent respectively over FY22-FY24E. We maintain ‘hold’ rating, with a revised target price of Rs 1,250 per share,” they said. Besides, the board of directors approved issue of bonus shares, in proportion of 5:1, i.e. 5 (five) bonus equity shares of Re 1 each for every 1 (one) fully paid-up equity share held as on the record date on November 11, 2022.