Nykaa share price jumped over 5% in early trade on Wednesday after the company reported strong Q2 results. Nykaa shares rallied as much as 5.74% to ₹187.85 apiece on the BSE.
FSN E-Commerce Ventures, the operator of fashion and beauty retailer Nykaa, reported a net profit growth of 72% year-on-year (YoY) to ₹10.04 crore in the quarter ended September 2024.
The company’s revenue from operations in Q2FY25 rose 24% to ₹1,874.74 crore from ₹1,507.02 crore in the year-ago period. The beauty segment revenues jumped 24% YoY to ₹1,703 crore, while fashion segment revenue was up 22% YoY to ₹166 crore.
The gross merchandise value (GMV) during the quarter ended September 2024 increased 24% YoY growth at ₹3,652 crore. The GMV for the beauty segment rose 29% YoY to ₹2,783 crore, while that for fashion business was up 10% YoY to ₹863 crore.
Analysts’ review
Brokerage firm Nuvama Institutional Equities reckons an improvement in growth in H2 on the back of higher festive and wedding demand.
“We continue to forecast an improvement in profitability on the back of operative leverage, although we have moderated our expectations due to elevated marketing spends. We are reducing FY25, FY26 and FY27 PAT estimates by 8.2%, 8.0%, 8.7%,” Nuvama Equities said.
The brokerage firm has a ‘Buy’ rating on Nykaa shares, but cut the target price to ₹205 per share from ₹220 earlier.
Kotak Institutional Equities trimmed its FY2025-27 EBITDA estimates by 6-9% as it assumes lower profitability in the BPC business on account of higher marketing spends and S&D expenses as well as slightly higher loss run-rate for the eB2B business.
“We also note a potential risk from quick commerce companies, which continue to add brands and SKUs and may eventually put pressure on Nykaa’s fulfilment costs. We also align depreciation charge to 1HFY25 run-rate resulting in a sharply higher EPS cut,” said the brokerage firm.
It retained a ‘Sell’ rating and reduced Nykaa share price target to ₹170 apiece from ₹190 earlier.
At 9:40 am, Nykaa shares were trading 0.82% higher at ₹179.10 apiece on the BSE.
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