Nykaa shares up 1% on positive growth projection for June quarter

Despite a slowdown in discretionary spending, the Beauty and Personal Care (BPC) category's consumption remained robust, aligning with the long-term trajectory.

Nykaa shares gained more than 1 percent in early trade on July 7 after the company announced that it anticipates a year-on-year (YoY) growth in consolidated revenue in the mid-twenties for the June quarter. The disclosure to the exchanges was posted before the market opened for trading today.

At 10:07 am, Nykaa was quoting at Rs 146, trading 1.56 percent higher than the previous day's close on the National Stock Exchange. The stock has been on a positive run in the last month, giving more than 8 percent.

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Despite a slowdown in discretionary spending, the company said that the Beauty and Personal Care (BPC) category's consumption remained robust, aligning with the long-term trajectory.

Nykaa highlighted the success of its flagship sale event, the 'Pink Summer Sale,' during the quarter, and expects the net sales value (NSV) of its BPC business to grow in the early twenties on a YoY basis. This growth is supported by strong urban demand in the category.

During the quarter, the apparel industry experienced an impact from the slowdown in discretionary spending, particularly in smaller towns. However, Nykaa expects discretionary spending to recover as seasonal demand picks up.

The company noted that its Fashion business displayed relative resilience, with a gradual improvement in order volume and a sustained YoY increase in average order value (AOV).

The lifestyle-focused consumer technology platform expressed optimism about the Indian economy's macro indicators, which indicate a healthy trend. Robust GST collections, moderate inflation, and stabilising interest rates are positive signs for the industry's long-term health.

The stock has fallen 41 percent over the last year, prompting the Association of Mutual Funds in India (AMFI) to downgrade the stock to midcap from large cap.

The operator of beauty and personal care startup saw its profits decline by over 70 percent YoY in Q4FY23 to Rs 2.3 crore on the back of higher raw materials prices. The company’s revenue from operations, however, increased by around 34 percent to Rs 1,301.7 crore, from Rs 973.3 crore that it registered in the same quarter last year.

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