Nykaa Reports Impressive Q3 FY24 Growth Surpassing Beauty Industry Estimates

• ByStartupStory     |    January 8, 2024

Beauty and personal care giant Nykaa has reported impressive growth in its third-quarter performance for FY24, surpassing industry projections. The company foresees substantial expansion in its gross merchandise value (GMV) and net sales value (NSV) within the mid-20s range for the beauty and personal care segment, a significant stride from its filing with stock exchanges on Sunday.

Nykaa attributes the divergence between GMV and NSV growth to brand-driven pricing and discount strategies, particularly in mass and masstige categories. However, the company emphasizes that despite this discrepancy, the underlying order volume growth remains robust and consistent, reflecting a sustained demand from customers.

With a 50% surge in net profit to Rs 7.8 crore in the preceding quarter and a 22% rise in revenue to Rs 1,507 crore in Q2 FY24, Nykaa’s beauty and personal care (BPC) segment, its primary revenue driver, witnessed a substantial 23% year-over-year growth in GMV to Rs 2,001 crore.

Speaking on the sector’s growth, Nykaa expressed confidence in its BPC performance outstripping industry growth, though acknowledging a current industry growth rate below the long-term trajectory. The company remains optimistic about the sector’s potential to revert to a median growth pattern in the near to mid-term, fueled by favorable macroeconomic and demographic indicators.

Furthermore, Nykaa highlighted its commitment to expanding the BPC category by investing in initiatives like Nykaaland, a successful beauty and lifestyle festival in Mumbai, which drew over 15,000 ticketed visitors.

In addition to BPC, Nykaa’s other significant revenue generator, Nykaa Fashion, anticipates a substantial growth of around 40% in GMV and low-30s growth in NSV on a year-over-year basis. This comes amidst subdued industry-level consumption and lackluster festive season demand, where Nykaa Fashion experienced a modest 28% rise in revenue from operations in the second quarter.

At a consolidated level for Q3 FY24, Nykaa expects a mid-twenties NSV growth and low-twenties revenue growth year-over-year. The company acknowledged the improving long-term macro indicators such as strong GDP growth, stable interest rates, and growing GST collections, although noting some impact on discretionary consumption due to short-term pressures.

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