Shares of Nykaa’s parent company-FSN E-Commerce rose 3 percent on February 11, as investors applauded the company’s positive third quarter earnings, including a sharp rise in its net profit.
The beauty and personal care company’s net profit rose 51 per cent to Rs 26.4 crore in the December quarter from Rs 17.5 crore in the same period a year ago.
Nykaa’s consolidated revenue grew 27 per cent year-on-year to Rs 2,267 crore from Rs 1,789 crore a year ago. The revenue growth is in line with the company’s estimates, which expected growth to be “in the mid-twenties” range, according to a quarterly revenue update on January 5.
The strong revenue growth was primarily driven by the company’s core beauty vertical, which recorded accelerated growth compared to previous quarters. Nykaa also forecast the gross merchandise value (GMV) of this segment to grow in the low thirties, driven by strong momentum across multiple channels, including its e-commerce platform, retail stores, owned brands, and EB2B distribution.
At 10.09 am, shares of FSN E-Commerce were trading at Rs 172.98 on the NSE. The surge in Nykaa share price was also driven by a surge in trading volumes in the counter. So far, 92 lakh shares of Nykaa were traded on the exchanges, which is already higher than the one-month average of 76 lakh shares traded daily.
Encouraged by the company’s strong Q3 performance, analysts at Morgan Stanley have projected a 29 per cent CAGR for the company over FY24-27.
The brokerage firm also likes Nykaa’s consistent topline delivery in the beauty space over the past few quarters despite a weak demand environment. Due to this, Morgan Stanley has also maintained its ‘overweight’ stance on Nykaa, with a price target of Rs 200.
