Nykaa’s Q3 Profit More Than Doubles YoY To INR 17.4 Cr

Beauty and fashion ecommerce major Nykaa’s consolidated net profit more than doubled to INR 17.4 Cr in the December quarter (Q3) of the financial year 2023-24 (FY24) from INR 8.5 Cr in the year-ago quarter, helped by a steady improvement in its fashion business in the festival season.

Net profit also jumped 123.7% on a quarter-on-quarter (QoQ) basis from INR 7.8 Cr in the prior fiscal – Q2 FY24.

Operating revenue grew 22% to INR 1,788.8 Cr in the reported quarter from INR 1,462.8 Cr posted in Q3 FY23.

The startup’s top line also improved 18.7% sequentially from INR 1,507 Cr.

The company said its EBITDA margin expanded to 5.5% during Q3 FY24, while EBITDA rose 26% year-on-year (YoY) to INR 98.8 Cr due to direct and indirect cost efficiencies.

In a statement, Nykaa said it rolled out an ESOP grant for critical and top talent across the organisation levels during the quarter, which is now reflecting in its employee expenses. Adjusted for ESOP and new business expenses, the company’s EBITDA margin would have been 6.1%.

Overall, the business witnessed a 29% YoY jump in gross merchandise value (GMV) to INR 3,619.4 Cr in Q3 FY2024.

The company said its consolidated GMV in the beauty and personal care (BPC) segment witnessed a growth of 25% YoY to INR 2,369.7 Cr in the reported quarter, which was led by a sharp increase in the demand for premium BPC brands.

As per Nykaa, more than 65% of its offline GMV came from premium brands.

The BPC vertical’s NSV stood at INR 1,380.3 Cr in Q3 FY24. 

Meanwhile, Nykaa continued to expand its physical retail footprint with 39 new stores launched in the last 4 quarters, with a total count of 174 stores as of December 31, 2023.

On the other hand, Nykaa fashion vertical’s GMV jumped 40% YoY INR 1,012.5 Cr.

“Our fashion business is showing consistent improvement in profitability, reflecting our platform strength and quality of our customers,” said Nykaa. 

The contribution margin as a percentage to net sales value (NSV) for Nykaa Fashion improved by 510 bps and stood at 6% in Q3 FY24 as against 0.9% in the last year’s quarter. 

The fashion vertical NSV has grown both QoQ and YoY to INR 275.2 Cr in the reported quarter. 

In fact, to fuel this growth further, Nykaa also said in a separate statement on Tuesday (February 6) that it would infuse INR 150 Cr in Nykaa Fashion Limited.

While there was a growth overall, Nykaa’s gross margin witnessed some degrowth in Q3 FY24 on a YoY basis, which the company largely attributed to product discounting in both BPC and fashion verticals.

Zooming Into Expenses

Nykaa spent INR 1,769.9 Cr in total during the reported quarter, registering a 21.5% rise YoY. 

Fulfilment Expense: Nykaa spent INR 171.8 Cr in this bucket in Q3 FY24 as against INR 157.2 Cr spent on it last year. However, the company’s fulfilment cost as a percentage of revenue decreased by 114 bps YoY to 9.6% in the quarter.

Marketing And Ad Expense: Nykaa spent INR 217.5 Cr in advertising and marketing in the reported quarter, a 27% jump YoY.

Meanwhile, the cost as percentage of revenue increased 46 bps YoY to 12.2%.

Employee Cost: The company’s employee benefit expenses grew 16% to INR 147.9 Cr in Q3 FY24 from INR 127.9 Cr in the year-ago period.

Ahead of its Q3 earnings announcement, shares of Nykaa ended Tuesday’s session marginally lower at INR 160.5 on the BSE.