HDFC Securities' research report on Fsn E-commerce Ventures (Nykaa)
Nykaa’s Q1 top line grew 23.8% YoY to INR14.22bn (HSIE: INR14.38bn). BPC growth continues to moderate (19.5% YoY in Q1; vs 42% CAGR over FY19-23). BPC AUTC (20% YoY in Q1 vs 30% CAGR clocked over FY19-23) continues to moderate. The reliance of growth on existing customers continues to rise. The struggle for the fashion foray continues (AUTC growth lags order growth in BPC as well as fashion). GM contracted 89bps YoY to 43.5% (HSIE: 44.0%) due to an increase in the mix of eB2B business. PBT margin remained flat YoY (0.7%; HSIE: 1.8%). Our thesis remains on track in Q1 as (1) BPC AUTC continues to moderate and (2) ad income as a percentage of revenue dropped 270bps+ YoY.
Outlook
We’ve cut our FY25/26 EBITDA estimates by 4-7% and maintained our REDUCE rating with a TP of INR130/sh (implying 72x Sep-25 EV/EBITDA).
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