Nykaa Q2FY24 results: A Beauty brand on the rise with 5x growth

Company Overview:

Nykaa, established in 2012 by Falguni Nayar, stands as a prominent Indian e-commerce company specializing in beauty, wellness, and fashion products. Over the years, the company has experienced substantial growth, becoming a household name in India. Nykaa’s product range encompasses offerings from both local and international brands. Nykaa has a cumulative customer base of over 21 million, with over 3,600 domestic and international brands available across its 165 physical stores. The company also has over 80 participating brands and over 800 influencers, MUAs, and KOLs. Additionally, Nykaa has generated over 5,000 pieces of content.

Nykaa Q2 Business Segment Highlights:

Nykaa’s primary revenue driver is the Beauty and Personal Care (BPC) segment, contributing 77.9% of its revenue, 15.5% for Fashion, and 6.6% for other categories. The Compound Annual Growth Rate (CAGR) of the Gross Merchandise Value (GMV) has been 31%. The customer base has grown significantly, with 21% new consumers and 79% old customers totalling 20,016 in total. Nykaa’s product selections include over 3,600 foreign and domestic brands, as well as over 10,000 new Stock Keeping Units (SKUs) among the top 400 brands.

Strong key metrics:

In the fiscal year 2023, Nykaa demonstrated strong performance across both the Beauty and Personal Care (BPC) and Fashion segments. The BPC segment experienced a noteworthy 6% QoQ increase in monthly average visitors, reaching 26.8 million. This surge translated into a total of 10 million orders, marking a substantial 4% QoQ growth. The average order value (AOV) remained consistently strong at INR 1,916.

The Gross Merchandise Value (GMV) for the BPC segment exhibited robust growth, escalating by 8% QoQ to INR 20,016 million. Moving to the Fashion segment, there was a 6% QoQ rise in monthly average visitors, reaching 17.6 million. This uptick contributed to 1.7 million orders, reflecting a significant 18% QoQ increase, with the AOV steadily growing to INR 4061. Notably, the Fashion GMV demonstrated remarkable growth, surging by an impressive 17% QoQ to INR 7628 million.

Nykaa’s Offline Expansion:

Nykaa has significantly broadened its footprint, establishing 165 physical stores in over 60 cities across India. These stores feature three distinct formats: Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks. In Q2FY24 alone, the company successfully launched 13 new stores, contributing to an impressive 34% year-on-year (YoY) growth. This offline expansion has proven impactful, with an 8% contribution to the overall Gross Merchandise Value (GMV) in the Beauty and Personal Care (BPC) segment.

Nykaaland 2023: India’s Premier Beauty Festival

Nykaa, in its grandest celebration, hosted Nykaaland 2023, marking India’s biggest beauty festival. The event witnessed enthusiastic participation with over 80 brands, collaboration with 800 influencers, MUAs, and KOLs, resulting in the creation of over 5,000 diverse content pieces. This extravaganza drew a massive crowd, with more than 15,000 attendees immersing themselves in the beauty experience. Nykaa’s strategic social media and influencer outreach achieved a staggering reach of 525 million, amplifying the festival’s impact. A unique highlight was the first-time early access for Prive Gold & Platinum members.

Valuation and Key Ratios:

Nykaa’s stock valuation is notably high, standing at a multiple of 2,490 PE, with a market price of INR 171. This is in sharp contrast to the industry PE of 46.5. The company reports return ratios, with ROE at 1.42% and ROCE at 5.52%. Additionally, the stock is trading at 35.04 times its book value, and the EV/EBITDA stands at 149x.

Nykaa’s Q2FY24 Financial Performance:

Nykaa has experienced a notable 50% year-on-year (YoY) surge in net profit, reaching INR 7.8 crore. In Q2FY24, Nykaa maintained its upward trajectory, achieving a 22% YoY increase in revenue, reaching INR 15,070 crore. The key driver of this growth was the Beauty and Personal Care (BPC) segment, witnessing an 18% YoY surge to INR 12,782 crore, complemented by a robust 28% YoY increase in the Fashion business. The GMV soared to INR 29,435, reflecting a substantial 25% YoY growth, with significant contributions from both the BPC and Other business segments. EBITDA exhibited a noteworthy 10% QoQ increase, reaching INR 806 crore, and margins expanded by 18 bps QoQ. The PAT also demonstrated growth, reaching INR 7.8 crore.

Conclusion:

Nykaa, founded in 2012, has become a major force in Indian beauty and fashion e-commerce. With a customer base of over 21 million, 3,600 brands, and 165 physical stores, the company has witnessed substantial growth. Key Q2FY24 highlights include a 22% YoY revenue increase, with the BPC segment leading at 18% YoY growth. Nykaa’s offline expansion, showcased by 165 stores, and successful events like Nykaaland 2023 contribute to its strong market presence. Despite a high stock valuation, Nykaa’s financial indicators and a 50% YoY surge in net profit indicate a robust and strategic position in the industry.

The image added is for representation purposes only