Nykaa Q3 Results Preview: Nykaa Q3 Results Preview: Sales, PAT could post double digit growth, margin view is mixed

Strong sales growth in both beauty and personal care and fashion is expected to have helped e-retailer FSN E-Commerce Ventures to perform well in the quarter ended December.

Analysts expect the company to report 29-40% year-on-year (YoY) growth in consolidated revenue of Rs.1,098 crore. Net profit is expected to have grown 19-57% yoy from Rs 28 crore.

Popular brand owner “Nykaa” is set to release its third-quarter results on Monday.

While earnings have improved, stock performance has yet to reflect it. Over the past year, the stock has been the worst-performing new-age tech company, with a 51% negative return.

Here is a summary of analysts’ expectations for the company:

Sales are expected to grow 40% year over year, driven by 35% growth in the beauty and personal care (BPC) category and 41% growth in gross merchandise value (GMV) for fashion. The EBITDA margin is expected to shrink 77 basis points sequentially to 5.5%, but increase 55 basis points year-on-year.

Nuvama Institutional Equities
For FSN E-Commerce’s BPC segment, the brokerage firm expects orders to grow 33% year over year. The average order value (AOV) for the segment is expected to decrease 3% year over year, representing 26% year over year GMV growth (up 16% qoq).
In the fashion segment, which experienced a subdued quarter in Q2FY23, the brokerage expects some pick-up and is building order growth of 10% QoQ and 19% YoY. For the segment, it expects AOV to increase 12% year over year and 2% quarter over quarter, looking at historical trends. Overall, this will result in GMV growth of 28% year over year and 3% quarter over quarter.
For the new business segment, it is building in a GMV of Rs 140 crore (Q2FY23: Rs 120 crore). This translates into company-level GMV growth of 30% year over year and 13% quarter over quarter.
Overall, EBITDA margins are expected to come in at 6.7% versus 6.3% a year ago, driven by higher gross margins offsetting increases in other costs.

Kotak Institutional Shares
Revenue growth of 39% year over year and 24% quarter over quarter is expected, driven primarily by the holiday season, flagship sales and continued growth in the BPC (35% YoY) and fashion (27% YoY) businesses.
Sequentially higher ad spend is expected due to the festive season and higher branding activity.
It expects sequentially higher gross margins due to more fashion in the mix; this together with the operational leverage will result in a sequential increase in the EBITDA margin by 230 basis points.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)

https://economictimes.indiatimes.com/markets/stocks/earnings/nykaa-q3-preview-sales-pat-may-see-double-digit-growth-view-on-margin-mixed/articleshow/97856849.cms Nykaa Q3 Results Preview: Nykaa Q3 Results Preview: Sales, PAT could post double digit growth, margin view is mixed

Luke Plunkett

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