In Monday’s opening trades, Nykaa shares jumped about 3% to 1,390 apiece on the BSE, despite FSN E-Commerce, which operates under the Nykaa brand, reporting a 57 percent drop in its consolidated earnings to 7.57 crore for the fourth quarter ended March 2022, owing to additional investments.
Its operating revenue climbed by more than 31% to 973 crore in the quarter under review, up from 740.5 crore the year before.
Nykaa’s sales performance in Q4FY22 was in line with analyst expectations. ICICI Securities analysts welcome the increasing investments in developing new businesses, as well as the stable BPC margins. Given that horizontal players currently provide a superior consumer experience, regionalisation of warehousing to generate better consumer experience was a must. In a report, the brokerage house noted that the eB2B company “presents good long-term potential with scale-led benefits likely to arise for the core business as well.”
The beauty and personal care vertical’s gross merchandise value (GMV) increased by 29% to 1,248.5 crore in the March 2022 quarter, up from 964.5 crore the previous quarter. During the quarter, the fashion vertical grew by 84 percent to 482.7 crore from 262 crore the previous quarter.
Both vertical and horizontal competitors will most likely increase their efforts. According to ICICI Securities, “although we expect BPC sales to expand, we believe Nykaa’s trajectory will be different — it will have to go more popular to generate this growth.” It has maintained a Hold rating on Nykaa stock, with a price objective of $1300.
