Nykaa Q4 Net Profit Plummets 70% YoY To INR 2.3 Cr

Mumbai-based beauty ecommerce platform Nykaa’s net profit plunged nearly 70% year-on-year (YoY) to INR 2.3 Cr in the quarter ended March 2023 (Q4) as rise in total expenditure and tax expenses hurt the bottom line.

The startup had reported a net profit of INR 7.6 Cr in January-March 2022. Nykaa’s net profit also declined 73% from INR 8.5 Cr in December 2022 quarter.

Revenue from operations rose 33.7% YoY to INR 1,301.7 Cr in Q4 FY23. However, it declined 11% on a quarter-on-quarter basis (QoQ) from INR 1,462.8 Cr.

Total income grew 33% YoY to INR 1,311.4 Cr during the quarter under review, however, declined 10.6% on a QoQ basis. 

On the expenditure side, the startup saw its expenses rise 33% YoY to INR 1,302.8 Cr in March quarter. However, it dropped 10.5% from INR 1,455.7 Cr in December quarter of 2022. 

Employee benefit expenses rose 40% to INR 127.3 Cr in Q4 from INR 90.9 Cr in January-March 2022. However, it declined marginally from INR 127.9 Cr in the preceding December quarter. 

Nykaa’s total tax expense stood at INR 4.4 Cr in Q4 FY23 as against a tax credit of 1.8 Cr in the year-ago quarter. Its tax expense stood at INR 3.5 Cr in Q3 FY23.

Nykaa also suffered a loss of INR 2 Cr on account of its associate company Earth Rhythm during the quarter under review.

For FY23, Nykaa’s net profit dropped 49% to INR 20.9 Cr from INR 41.3 Cr in FY22. Total income rose 36% to INR 5,174 Cr in FY23 from INR 3,800.9 Cr in FY22. 

The decline in numbers comes at a time when decrease in discretionary spending by consumers due to rising inflation has affected Nykaa’s business.

Providing a business update on its Q4 performance last month, Nykaa said consumer pullback in discretionary spends had “some impact” on its fashion business.

Earlier in February, Nykaa MD and CEO Falguni Nayar, during the company’s Q3 FY23 earnings call, said, “In terms of Q3 of this financial year, it was quite strong but the margin may be slightly impacted in terms of consumption because of what’s going on in terms of discretionary spend.” 

Besides, Nykaa has also been facing increasing competition. To add to the competition it was facing from the likes of Mamaearth, Purple, Sugar Cosmetics, and Myntra, Reliance Retail launched its beauty and commerce platform Tira last month. 

Shares of Nykaa ended 2.53% lower at INR 125.05 on the BSE on Wednesday. The company released its financial results after market hours