Shares of Nykaa Fashion operator FSN E-Commerce Ventures are expected to react today to its December quarter earnings posted on February 13.
Indian beauty and personal care e-commerce company logged in a 71 percent decline in net profit to Rs 8.5 crore in Q3FY23 from Rs 29 crore a year ago.
The company's revenue from operations, however, surged 33 percent on-year to Rs 1,463 crore, up from Rs 1,098 crore in Q3FY22. Expenses for the quarter also increased 36 percent on-year to Rs 1,455 crore.
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While Goldman Sachs maintained a 'neutral' rating with a target of Rs 200 per share, it was surprised by the acceleration in fashion growth, while negatively surprised by the BPC (beauty and personal care) segment.
The research firm lowered its revenue estimates for FY23-25 by up to 4 percent, with sharper EBITDA cuts at 14-28 percent, as Nykaa's profits were below expectations due to lower gross margins and higher-than-expected spends on the eB2B (e-commerce business to business) vertical.
Read: Nykaa chief Falguni Nayar stands by bonus issue, but admits error in trading strategy
Jefferies continued to maintain a 'buy' rating on the stock with a target of Rs 200 per share. The firm noted that Q3 gross merchandise value growth was led by fashion and other categories, while BPC was impacted by a high base and weak macro conditions.
The firm observed that Nykaa's revenue was largely in-line, but gross margins were below expectations due to inferior product mix, discounting, and down trading. Operating leverage helped Nykaa to report an EBITDA margin in-line with expectations. It is continuing to invest in its eB2B business, offline expansion, and own label offerings.
Also Read: Those giving up long-term growth for short-term profitability are wrong: Nykaa’s Falguni Nayar
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