Beauty and fashion firm FSN E-commerce Ventures Ltd, which is the parent company of cosmetics-to-fashion retailer Nykaa, has reported a decline of nearly 71% in net profit for the third quarter of the current financial year (Q3 FY23) ending December 2022. Did. 8.4 crore as compared to 29 crore in the year-ago quarter. Still, the company saw a 33% increase in revenue 1,463 crores.
“FSN E-Commerce Ventures (Nykaa) reported a mixed bag—it met growth expectations, but felt the down-trading impact as well as lower gross margins for both BPC and Fashion Happened. Revival of growth in fashion has been a concern for several quarters, said brokerage Nuwama Research.
While the Gross Merchandise Value (GMV) of the company grew by 37% year-on-year (YoY). 2,796.5 crore, Average Order Value (AOV) fell 0.5% 1,958. Nykaa Executive Chairman, MD & CEO Falguni Nair Said that the company is focusing on improving Ebitda (operational profit) margin.
“Given the recent volatility in the stock, we again factor in the high cost of capital assumption which achieves the target price 195; keep buy on shared by nyaka, A confluence of both growth and profitability will be key to improving valuations. In addition, the gross margin miss, an aberration according to management, should otherwise be reversed as any structural impact could negate gains in marketing and fulfillment,” the note said.
“While contribution margin remained at 24% (Q3FY22: 22%, Q2FY23: 24%), gross margin declined ~180 bp YoY to 41%, driven by category mix changes, higher brand funded discounts during festivities and consumer downgrades Looking ahead, while Q3 is ideally the strongest quarter, Nykaa expects higher marriages and sales events to drive growth in Q4FY23,” said Nuwama.
Global brokerage Goldman Sachs has a neutral rating with a target price of 200. The brokerage said profit came in below estimates on lower gross margin and higher-than-expected spending on the eB2B vertical. Furthermore, the positive surprise was an acceleration in fashion growth while the BPC segment surprised negatively.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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