Shares of Nykaa parent--FSN E-commerce gained 3 percent on February 11 as investors cheered for the company's positive Q3 earnings, marked by a sharp spike in its net profit.
The beauty and personal care company's net profit surged 51 percent on year to Rs 26.4 crore for the December quarter, up from the Rs 17.5 crore that it clocked in the year-ago period.
Nykaa’s consolidated revenue grew 27 percent year-on-year to Rs 2,267 crore, up from Rs 1,789 crore a year ago. The revenue growth aligned with the company’s projections, which anticipated an increase “higher than mid-twenties,” as per its quarterly revenue update on January 5.
The strong revenue uptick was primarily driven by the company’s core beauty vertical, which recorded accelerated growth compared to previous quarters. Nykaa had also anticipated the gross merchandise value (GMV) of this segment to grow in the low thirties, fuelled by robust momentum across multiple channels—including its e-commerce platform, retail stores, owned brands, and eB2B distribution.
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At 10.09 am, shares of FSN E-commerce were trading at Rs 172.98 on the NSE. The uptick in Nykaa's share price was also driven by a spike in trading volumes in the counter. As much as 92 lakh shares of Nykaa changed hands on the exchanges thus far, already higher than the one-month daily traded average of 76 lakh shares.
Buoyed by the company's strong Q3 performance, analysts at Morgan Stanley build in a 29 percent CAGR for the company over FY24-27 led by 29 percent growth in its beauty business. On top of that, Morgan Stanley also views Nykaa as a consumer business with a technology edge. The brokerage firm also likes Nykaa's consistent topline delivery in beauty over the last few quarter despite a weak demand environment.
On that account, Morgan Stanley also retained its 'overweight' stance on Nykaa, with a price target of Rs 200.
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