Result-Analysis-Elite-Wealth
Result Analysis:  Nykaa (FSN E-Commerce Ventures Ltd.) (CMP: Rs.149.65) Result Update: Q3FY23

Nykaa (FSN E-Commerce) was founded in 2012 by Indian entrepreneur Falguni Nayar. Since its launch, Nykaa expanded its product categories by introducing online platforms Nykaa Fashion, Nykaa Man, and Superstore. Nykaa offers over 4,500 brands and over 4.6 million product SKUs through its website and mobile applications. Through engaging and educational content, digital marketing, social media influence, robust CRM strategies, and the Nykaa Network community platform, Nykaa has built a loyal community of millions of beauty and fashion enthusiasts.


    Open FREE* Demat & Trading Account & ₹0 AMC for first year


     

    Stock Details
    Market Cap. (Cr.) 42667
    Equity (Cr.) 285.11
    Face Value 1
    52 Wk. high/low 315 / 121
    BSE Code 543384
    NSE Code NYKAA
    Book Value (Rs.) 5.57
    Sector E-Commerce
    Key Ratios
    Debt-equity: 0.05
    ROCE (%): 11.28
    ROE (%): 9.68
    TTM EPS: 0.3
    P/BV: 26.87
    TTM P/E: 498.83

    Result Highlights:

    • Nykaa reported robust growth in revenue with an increase of 33.18% YoY basis and 18.85% on QoQ basis to Rs.1462.83 cr. in Q3FY23. Whereas company has clocked PAT of Rs.22 cr. in the Dec. quarter, a growth of 62.9% QoQ and de-growth of 68.22% YoY.

    • EBITDA margin of the company has increased sequentially by 24 bps and showed a decline of 109 bps on YoY basis to 5.73%.

    • Nykaa has increased its own physical store count to 141 stores, including three new owned fashion stores, with a total area of 1.4 Lacs sq. ft. across 56 cities, and 40 fulfilment centres with a total area of 1.3 million sq. ft, as on December 31, 2022.

    • On segment front, Beauty and Personal Care (BPC), Fashion, and others reported growth in GMV of 26%, 50%, and 254% respectively on YoY basis.

    • Nykaa reported highest ever conversions of 3.8% in BPC, and 1.2% for Fashion in Q3FY23.

    • Fashion now contributes to 25.9% of GMV, and 14.6% at NSV level. Other business led by the SuperStore, a e-B2B initiative now contributes to 6.1% of the GMV from 2.4% in Q3FY22

    Financial Performance:

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 52.34%
    FIIs 26.45%
    DIIs 6.36%
    Public 13.20%
    Others 6.33%

    Managerial commentary:

    Falguni Nayar, Executive Chairperson, MD, and CEO, said: The business has delivered consistent strong GMV and revenue growth at 37% YoY and 33% YoY respectively. The performance has been especially good given the backdrop of eight fewer festive days in Q3FY23, compared to Q3FY22. Especially heartening is the rebound of Nykaa Fashion, that has delivered a GMV and revenue growth of 50% YoY and 43% YoY respectively. Our EBITDA delivery has been strong, with scale efficiencies in fulfilment and marketing expense. There’s been a structural improvement in fulfilment expense as we move to regional warehouses. Our employee benefit expense has been kept in check post 1HFY23, as we have secured the talent we needed, and look towards enhanced productivity. Our accelerated investments in new beauty store roll-out this year has seen us add 14 stores in Q3 FY23, taking the total store count to 135 stores and making us the largest beauty specialist retailer in India.”

    Outlook:

    Nykaa reported inline Q3FY23 results with growth in revenue of 33.18% despite the weak consumption sentiment, and shift in Navratri to Q2FY23. Lower gross profits were seen due to change in mix and consumer downgrade which impacted the EBITDA, the increase in D&A and finance costs on new stores, warehouses dragged the PAT of the company. For the 9MFY23 Nykaa has reported the earnings of Rs.0.06 and we expect the company to close the FY23 at the eEPS of Rs.0.08.

    Results: 

    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ% YoY% 9MFY23 9MFY22 YoY%
    Revenue from Operations 1,462.83 1,230.83 1,098.36 18.85% 33.18% 3,842.08 2,800.62 37.19%
    Other Income 5.64 6.48 5.91 -12.96% -4.57% 20.48 15.83 29.37%
    Total Income 1,468.47 1,237.31 1,104.27 18.68% 32.98% 3,862.56 2,816.45 37.14%
    Cost of Materials Consumed 16.61 22.25 17.66 -25.35% -5.95% 62.16 58.53 6.20%
    Trade Purchases 918.89 585.80 690.22 56.86% 33.13% 2,246.25 1,743.47 28.84%
    Changes in Inventories -107.35 65.04 -118.27 -265.05% -9.23% -168.61 -220.04 -23.37%
    Employee benefits expense 127.92 121.76 93.54 5.06% 36.75% 364.39 235.54 54.70%
    Other Expenses 428.59 374.84 346.24 14.34% 23.78% 1,152.55 858.38 34.27%
    EBITDA 83.81 67.62 74.88 23.94% 11.93% 205.82 140.57 46.42%
    EBITDA Margin (%) 5.73% 5.49% 6.82% 24 bps -109 bps 5.36% 5.02% 34 bps
    Finance Cost 20.42 20.36 12.79 0.29% 59.66% 55.84 33.15 68.45%
    Depreciation & Amortisation expense 50.70 38.50 25.12 31.69% 101.83% 120.21 65.92 82.36%
    Profit Before Tax 12.69 8.76 36.97 44.86% -65.67% 29.77 41.50 -28.27%
    Tax 3.47 3.10 7.96 11.94% -56.41% 9.22 7.78 18.51%
    Profit After Tax 9.22 5.66 29.01 62.90% -68.22% 20.55 33.72 -39.06%
    PAT Margin (%) 0.63% 0.46% 2.64% 17 bps -201 bps 0.53% 1.20% -67 bps
    EPS (in Rs.) 0.03 0.01 0.10 200.00% -70.00% 0.06 0.12 -50.00%
    Source: Company website, EWL Research

    Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014

    Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
    For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
    Disclosure Appendix
    Analyst Certification (For Reports)
    Israil Khan, Elite Wealth Limited, suhail@elitewealth.in
    The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
    As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
    (1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
    (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
    For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
    Research Excerpts
    This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.
    Company-Specific Disclosures
    Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or emailing research@elitestock.com with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail research@elitestock.com.
    Options related research:
    If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in
    Other Disclosures
    All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
    Ownership and material conflicts of interest Disclosure
    Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
    Country Specific Disclosures
    India – For private circulation only, not for sale.
    Legal Entities Disclosures
    Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone:011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in
    EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
    1. Reports
    a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
    (b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
    (c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
    2. Compensation
    (a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
    (b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
    (c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
    (d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
    (e) EWL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
    3 In respect of Public Appearances
    (a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
    (b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL