Nykaa Shares Surge Over 5% After Strong Q3 Update

Beauty and fashion major Nykaa’s shares surged 5.21% at INR 176.50 during the intraday trading session today (January 6) following the company’s substantial Q3 update for the financial year 2024-25.

The company’s shares later pared some gains and were trading at INR 174.80 apiece with market valuation of INR 49,975 Cr at the time of writing this article.

Nykaa in an exchange filing yesterday (January 5) projected a strong performance in Q3 FY2025 with consolidated net revenue growth likely to be higher than mid-twenties.

“This is higher than the consolidated GMV (gross merchandise value) growth for the same period, indicating positive trend in GMV to net revenue translation,” the filing added. 

While GMV growth in Nykaa’s beauty business is anticipated to be around 30%, the expected net revenue growth of its fashion vertical is projected to be around 20%. Not to mention, the company also projected its net sales value (NSV) growth to be in the low to mid-teens.

“We believe online fashion demand continues to be subdued, but we remain optimistic about the long-term growth opportunity,” Nykaa added. 

Meanwhile, brokerage firm JM Financial has maintained a ‘buy’ recommendation for Nykaa with a target price of INR 240. This marks a potential upside of 43.07% from the stock’s last closing price (January 3). 

“Our triangulation for core beauty and personal care (BPC) YoY growth suggests that it would roughly fall in the 27-29% range,” as per a note by JM Financial.

It further added that despite the rise of BPC in quick commerce, it is “unlikely to come at the cost of Nykaa”.

Besides, it expects Nykaa’s Q3FY25 consolidated EBITDA margin to deliver 80-100 bps expansion on a sequential basis.

This comes after the company recorded a subdued September quarter results with BPC and fashion segments reporting net sales value (NSV) growth of 25 per cent and 13 per cent YoY.  

The company’s GMV growth for Q2 FY25 stood at INR 3,652.5 Cr. 

The stock has given a tepid performance in the recent time, giving a negative return of around 1.42%% in the last one year. However, the last 5 trading sessions for the stock have yielded a return of 7.6% at the CMP. 

Amidst other recent developments, Nykaa Fashion’s chief executive officer (CEO) Nihir Parikh tendered his resignation yesterday. Last year in November, it completed acquisition of a majority stake in D2C skincare and beauty brand Earth Rhythm.

This was another move at consolidating its BPC vertical, which is already performing better than its fashion vertical. 

The company has been experimenting with the quick commerce foray to recapture market share from the likes of Blinkit, Zepto, Swiggy Instamart and others. 

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