Nykaa’s Q3 profit rises 106% to Rs 17.5 crore

Nykaa Q3 results: FSN E-Commerce Ventures, the parent company of online beauty products retailer Nykaa, reported an increase in quarterly profit on Tuesday, attributing the surge to heightened festive demand. Additionally, the company announced the approval of the demerger of its business-to-business (B2B) segment by its board.

In the third quarter ending December 31, the company's consolidated net profit surged by 106 per cent to Rs 17.5 crore ($1.95 million). This notable growth marks a stark contrast to previous quarters, during which net profit experienced declines in three out of five instances.

The surge in profit can be largely attributed to the robust sales events rolled out by e-commerce companies during the quarter, coinciding with a delayed festive season encompassing celebrations such as Dussehra and Diwali, which commenced in October. These festivities traditionally drive a significant portion of annual sales for retailers like Nykaa, which faces competition from Tata Sons' Tata Cliq and Reliance's Tira.

Nykaa's earnings before interest, tax, depreciation, and amortization (EBITDA) margin expanded to 5.5 per cent, up from 5.3 per cent compared to the previous year. Furthermore, the overall gross merchandise value (GMV), representing the monetary value of all orders, witnessed a robust growth of 29 per cent to Rs 3,619 crore.

The beauty and personal care (BPC) segment, which constitutes the largest revenue contribution, recorded a noteworthy 25 per cent increase in GMV. Demand was additionally bolstered by India's wedding season, commencing in December.

Despite a 22 per cent year-on-year increase in overall revenue, sequential growth remained flat. Notably, Nykaa's electronic B2B segment, Superstore by Nykaa, experienced a significant 68 per cent year-on-year growth in GMV. As a result, the company announced plans to spin out the B2B segment into a separate unit named Nykaa E-Retail, to be housed under the parent company FSN E-Commerce.

The company also approved further investment in Nykaa Fashion through a rights issue worth Rs 150 crore. Additionally, FSN's acquisition of Nykaa Fashion's lingerie and athleisure business was approved on a slump-sale basis for Rs 229 crore. The exact contribution of the B2B segment to Nykaa's total revenue was not immediately disclosed.

(With Reuters inputs)