Nykaa stock climbs over 5% after it reports ₹5.2 crore profit in Q2

• Nykaa, reported over 300% growth on year in net profit to ₹5.2 crore for Q2 FY23.
• Meanwhile, Q2 revenue grew 39% to ₹1,230 crore from ₹885 crore last year.
• Shares of the company rose over 5% after the release of the quarterly results.
• Nykaa expects the second half of the year to be better because of the wedding season, Nykaa Pink Friday sale and the holiday season.

FSN E-Commerce Ventures, the parent company of online retailer of beauty and fashion products Nykaa, reported an over 300% growth in net profit to ₹5.2 crore in July-September, from ₹1.2 crore last year. Sequentially, Nykaa’s net profit grew marginally by 3.6% from ₹5 crore in the June quarter. However, costs have also risen as the company continues to invest in fulfilment centres, new stores and office space.

Meanwhile, revenue grew 39% to ₹1,230 crore in the September quarter from ₹885 crore last year. Operating margin has improved to 5% in Q2 as compared to 3.3% last year.

Expenses for the e-commerce platform, however, continue to rise because of the costs involved in marketing and employee benefit expenses. Total expenses during the quarter went up to ₹706 crore from ₹467 crore last year.

Nykaa says that consumer demand for premium products across beauty, wellness and personal care segments shows stable growth despite some inflation impacts in rural consumers. “Post Covid, our accelerated investments in new store rollouts as well as store upgradation has resulted in improved footfalls and higher same-store sales. Consumer demand for premium beauty, personal care and wellness is showing signs of buoyancy as we gear up for a promising H2 FY23,” said Falguni Nayar, executive chairperson, MD, and CEO at Nykaa.

Shares of the company rose over 5% after the release of the quarterly results.

Nykaa expects the second half of the year to be better because of the wedding season, Nykaa Pink Friday sale and the holiday season.

“It seems like the pandemic is now firmly in the rear view mirror, and, therefore, we are looking forward to a healthy and strong second half of the year. For retail businesses, Q3 is usually the strongest quarter so we are looking forward to a good festive season with no impact of pandemic. We are optimistic about good performance across not only online but our offline retail business as well,” said Achint Nayar of Nykaa during a press conference post earnings.

“For e-commerce in general, the end of November is a good period. November is also the wedding season. Also, in early December, some of the festivities anticipate the coming holiday season. We are just hoping some amount of consumption that we are seeing for e-commerce continues along with omni-channel,” said Nayar in an earnings call.

The e-commerce company for beauty, wellness and fashion products has partnered with over 3000 brands and 22 global brands who sell their products on Nykaa’s platform.

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