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<keyword id="6357073" type="General" weightage="100" keywordseo="itc" source="Orion">ITC</keyword> on Wednesday posted an 11.7 per cent rise in consolidated net profit during Q4FY22, at Rs 4,196 crore, as against Rs 3,755 crore recorded in the year ago period.<br /><br />On quarter on quarter basis, the profit rose 3.4 per cent.<br /><br />The company's earnings beats estimates of several market analysts.<br /><br />Besides, consolidated revenue rose 15.3 per cent on year to Rs 17,754 crore as compared to Rs 15,404 crore a year-ago.<br /><br />On a <keyword id="903746" type="General" weightage="50" keywordseo="qoq" source="Orion">QoQ</keyword> basis, however, the revenue declined 3.3 per cent.<br /><br />The better performance was pushed by healthy growth across its business of cigarettes, FMCG, hotels, and paperboards.<br /><br />Robust broad-based recovery in cigarettes business was witnessed despite disruptions due to the third wave and volumes too surpassed pre-pandemic levels.<br /><br />For entire fiscal FY22, the consolidated profit after tax grew 15.8 per cent to Rs 15,243 crore year on year, and consolidated revenues jumped 22.7 per cent to Rs 65,205 crore.<br /><br />After a challenging FY2020-21, and despite repeated disruptions this year, the business progressively recovered on the back of improved mobility and easing of restrictions, surpassing pre-pandemic levels in the latter half of the year.<br /><br />ITC effectively leveraged institutional strengths, digital technologies and learnings from previous waves to respond with agility across all nodes of operations.<br /><br />The company recommended a final dividend of Rs 6.25 per share for FY22, which will be paid between July 22-26, 2022. This is in addition to the interim dividend of Rs 5.25 per share declared earlier this year.<br /><br />The company said it remains focused on building purpose-led brands powered by agile innovation and anchored on larger consumer needs. The businesses continue to increasingly leverage 'Sixth Sense', the <keyword id="13972477" type="General" weightage="50" keywordseo="marketing-command-centre" source="Orion">Marketing Command Centre</keyword> and <keyword id="1397742" type="General" weightage="50" keywordseo="consumer-data" source="Orion">Consumer Data</keyword> Hub - an AI powered hyper-personalised platform backed by a robust partner ecosystem for content and data - to gain insights on market trends and consumer behaviour, and synthesise the same to craft contextual and hyper-personalised brand communication and product development, it added.<br /><br />In order to effectively leverage new routes-to-markets and meet the assortment needs of emerging channels, the company executed over 110 new product launches across target markets.<br /><br />The robust innovation platforms of the Company's Life Sciences and Technology Centre (LSTC) were instrumental in accelerating speed to market.<br /><br />SEE ALSO:<br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/personal-finance/news/ways-to-save-more-money-after-your-monthly-expenses/articleshow/91650065.cms">Ways to save more money after your monthly expenses</a><br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/investment/news/top-9-types-of-nfts-heres-the-complete-list/slidelist/91643024.cms">Crypto 101 – Understanding the different types of NFTs</a><br />

A 'healthy' growth in cigarettes vertical helped ITC beat earnings estimates

<ul><li><strong>For the first time, cigarette business contributed to less than half of ITC’s total sales.<br /></strong></li><li><strong>Since 1996, the non-cigarette business grew 21-fold.<br /></strong></li><li><strong>Tough regulations and tax are posing challenges to the company’s cigarette business.</strong><br /></li></ul>It took over two decades but Indian Tobacco Company or ITC successfully transitioned from selling cigarettes to other businesses like fast moving consumer goods like wheat flour, ready-to-eat foods, shampoos and soaps amongst others.<br /><br />For the first time in its century-long history, cigarette business contributed to less than half of its total sales. For the financial year that ended in March 2019, the cigarettes business accounted for 45.8%, as per<a href="https://brandequity.economictimes.indiatimes.com/news/business-of-brands/how-itc-s-strategy-to-reduce-revenue-dependency-on-cigarettes-worked-in-its-favour/69781151"> an ET report</a>.<br /><br />ITC has since diversified into hotels, agriculture and FMCG. It now has successful brands under its kitty like Ashirwaad, the consumer wheat flour brand, Yippee which is a ready-to-eat snacks brand, Bingo chips and Vivel; apart from incense sticks. Moreover, ITC’s chain of hotels has 90 hotels in India, and is expanding internationally too. <br /><br />Since 1996, the non-cigarette business grew 21-fold, and it is also pushing in money behind it. As much as 80% of capital deployed is flowing into other businesses. <br /><br /><strong>Up in Smoke <br /></strong><br />The 109-year-old company which started as Imperial Tobacco Company while the country was still under British rule, shed its reliance exclusively on tobacco 60 years into business.<br /><br />The company had predicted decades back that times will get tough for this business, and moved into other areas. And, its predictions have come true, affecting its flagship business.<br /><br />Tough regulations and taxes in the industry are posing challenges to the company’s cigarette business with over 15 popular brands that include Gold Flake, Navy Cut, Players, Scissors and Capstan. <br /><br />“A punitive and discriminatory taxation and regulatory regime, together with sharp increase in illegal trade in recent years, continue to pose significant operating challenges to the legal cigarette industry in the country,” ITC said in its annual report, released on June 13.<br /><br />The taxation on cigarettes after the implementation of Goods and Services Tax, went up by 20%. Between 2011-12 and 2017-18, the tax on cigarettes has trebled. In fact, cigarettes are the most taxed tobacco item, as it is 55 times higher than other tobacco products, effectively turning smoking, unaffordable.<br />

As cigarette business goes up in smoke, ITC pads itself with candy and curds

In spite of significant disruptions during the year, <keyword id="6357073" type="General" weightage="100" keywordseo="itc" source="Orion">ITC</keyword> posted robust growth in revenues and profits, surpassing pre-pandemic levels.<br /><br />ITC's consumer-centricity, agility in seizing market opportunities, focus on execution excellence and proactive strategic interventions enabled it to post robust growth.<br /><br />Overall for FY 2021-22, gross revenue at Rs 59,101.09 crore increased by 22.7 percent, while EBITDA increased by 22 percent to Rs 18,933.66 crore. Profit before tax at Rs 19,829.53 crore grew by 15.5 percent over the previous year while profit after tax stood at Rs 15,057.83 crore as against the previous year's Rs 13,031.68 crore.<br /><br />Total comprehensive income for the year stood at Rs 15,631.68 crore (previous year Rs 13,277.93 crore). Earnings per share for the year stood at Rs 12.22 (previous year Rs 10.59).<br /><br />An extensive strategy reset has been undertaken in recent years to architect the structural drivers that will power ITC's next horizon of growth and ensure that the enterprise remains future-ready, consumer-centric and nimble.<br /><br />Each of ITC's businesses has pivoted to create new frontiers for the future, with enhanced competitiveness as well as sharper focus on cost management to strengthen the leadership or rapidly enhance market standing in the case of newer segments.<br /><br />As a core element of the ITC Next strategy, the company will continue to explore opportunities to craft disruptive business models anchored at the intersection of digital and sustainability, the two defining trends in the 'new normal', leveraging its institutional strengths.<br /><br />The FMCG-Others segment turned in a resilient performance with segment revenue growing by 8.6 per cent amid subdued demand conditions. After a relatively muted first half, revenue in the second half of the year witnessed double-digit growth.<br /><br />Staples and <keyword id="151485" type="General" weightage="50" keywordseo="convenience-foods" source="Orion">Convenience Foods</keyword> remained resilient even as the pace of revenue growth moderated on a relatively high base. Discretionary/Out-of-Home categories recorded strong growth surpassing pre-pandemic levels driven by progressive improvement in mobility.<br /><br />Progressive resumption of physical classes at educational institutions led to gradual recovery in the Education &amp; Stationery Products business, however, sales remained below pre-pandemic levels. Segment EBITDA for the year grew by 10 per cent to Rs 1,448.97 crore with margins being sustained at 9.1 per cent in spite of unprecedented inflationary headwinds.<br /><br />To accentuate consumer-centricity, agility and enable sharper focus in the context of the growing scale and complexity of operations, the <keyword id="3506789" type="General" weightage="50" keywordseo="branded-packaged-foods" source="Orion">Branded Packaged Foods</keyword> businesses have been reorganised into market centric clusters with integrated and empowered teams.<br /><br />Focused interventions made in the recent past have also augmented ITC's multi-channel go-to-market capability, resulting in manifold expansion in the reach and availability of its products. Over the last five years, market and outlet coverage have grown 4x and 1.6x, respectively, while the network of stockists has expanded to 6.4x during the same period.<br /><br />The impact of these multi-dimensional interventions is evident in the substantial margin expansion of 650 bps in Segment EBITDA over the last five years even in the face of significant inflationary headwinds witnessed during the year.<br /><br />After an extremely challenging FY 2020-21, the Hotels Segment witnessed smart recovery driven by the domestic leisure and wedding segments; business travel also saw progressive improvement, albeit remaining well below pre-pandemic levels. Pick-up in revenues together with relentless focus on cost management resulted in a positive swing of Rs 346.63 crore in Segment EBITDA, despite considerable disruptions caused by the two waves of the pandemic during the year.<br /><br />The Agri Business segment delivered stellar performance with segment revenue and results growing by 28.7 per cent and 25.6 per cent, respectively. This was driven by strong growth in wheat, rice, spices and leaf tobacco exports on the back of strong customer relationships, robust sourcing network and agile execution.<br /><br />The Agri Business has been a strong backbone and a key source of competitive advantage for ITC's FMCG and cigarettes businesses. The scope and scale of operations have grown manifold over the years and currently encompass over 4 million tonnes in 22 states and over 20 agri-value chains.<br /><br />The Paperboards, Paper and Packaging segment recorded strong growth of 36 per cent in segment revenue and 54.7 per cent in segment results. This was aided by demand revival across most end-user segments, higher realisations, product mix enrichment and exports.<br /><br />Robust margin expansion of appx. 270 bps was achieved leveraging the integrated nature of the business model, Industry 4.0 and other digital interventions.<br /><br />During the year, <keyword id="121907" type="General" weightage="50" keywordseo="itc-infotech" source="Orion">ITC Infotech</keyword>'s consolidated total income grew by 16.8 per cent to Rs 2,884.30 crore (previous year Rs 2,469.29 crore). Profit before tax stood at Rs 719.64 crore (previous year Rs 604.13 crore) and net profit stood at Rs 541.04 crore (previous year Rs 451.30 crore).<br /><br /><strong>SEE ALSO:<br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/telecom/news/5g-in-india-does-the-aam-aadmi-even-need-it/articleshow/92382529.cms">5G in India – does the aam aadmi even need it?</a><br /></strong><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/maha-political-crisis-uddhav-thackeray-vacates-his-official-residence/articleshow/92400287.cms"><strong>Maha political crisis: Uddhav Thackeray vacates his official residence</strong></a><br />

ITC seizes the market; its sales surpass their pre-pandemic levels

<ul><li>Shares of consumer products company ITC surged as much as 5% on Thursday hitting its 52-week high at ₹261.80.</li><li>The company’s stock is known for its massive underperformance over the years as in the last five years ITC has gained just 7% while benchmark index <keyword id="6484188" type="General" weightage="20" keywordseo="sensex" source="Orion">Sensex</keyword> went up 120%.</li><li>Analysts believe the stock deserves better valuation following its poor stock performance over the years.</li></ul>Cigarettes-to-biscuits conglomerate ITC has been surprising investors with a rally in its shares in the last one month.<br /><br />Media <a href="https://economictimes.indiatimes.com/markets/stocks/news/itc-shares-surge-over-11-in-4-days-amid-speculation-over-tie-up-with-amazon/articleshow/87014416.cms">reports </a>indicate that e-commerce giant Amazon is planning to invest in ITC’s e-Choupal and this seems to have triggered the stock on Thursday. Shares of the company have gained as much as 5% hitting its 52-week high at ₹261.80 on October 14. <br /><div type="image" title="ITC chart" height="900" width="1200" msid="87016478" hostid="261"></div><br />Farmers use e-Choupal to order seeds, fertilisers and aquaculture products like soybeans, wheat, coffee, and prawns from ITC or its partners at prices lower than those available from village traders.<br /><br />Shares of ITC have gained 19% in the last one month, thanks to the rally in stock from <a href="https://www.businessinsider.in/business/corporates/news/itc-surprises-investors-by-rallying-7-5-suddenly-today/articleshow/86255237.cms">September 16</a>.<br /><br />A believe that the company’s cigarette business will fully recover with the aggressive vaccination drive and reduction in COVID-19 cases. <br /><br />“Overall, we expect ITC to see strong acceleration in earning growth led by the cigarette business. Earnings per share growth is likely to be in double-digits in both FY22 and FY23, <a href="https://www.financialexpress.com/market/itc-rating-buy-status-quo-on-tax-is-a-positive-for-firm/2334217/">reportedly </a>said analysts at Jefferies while recommending a “BUY” rating on the stock with a target price of ₹300. <br /><br />ICICIdirect has set a target price of ₹260 on the stock as it stated that the stock witnessed noteworthy delivery volume activity in September. <br /><br />SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/infosys-wipro-shares-up-as-q2-earnings-excite-investors/articleshow/87013663.cms">India’s techies are leaving IT firms in hordes —Here’s why</a><br /><br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/ecommerce/news/three-unicorns-hundreds-of-crore-in-loss-and-very-little-market-share-whats-the-hype-around-online-car-retailers/articleshow/87012417.cms">Three unicorns, hundreds of crore in loss and very little market share — What's the hype around online car retailers?</a>

ITC surges 5% on reports of potential investment from an e-commerce titan

<ul><li>Nykaa's share prices have crossed the ₹2200 mark, whereas ITC is trying to cross the ₹300 mark, Twitteratis have highlighted.</li><li>The point of contention for this meme is one  — ITC's net profit is much higher than Nykaa's profit.</li><li>Nykaa's profit fell significantly last quarter as Falguni Nayar decided that it was time to acquire new customers.</li></ul>Social media is buzzing with memes asking why Nykaa, a fashion retailer with an annual profit of ₹62 crore (in FY21), is valued more (i.e. at a greater multiple) than ITC, a 111-year old giant that sells cigarettes, consumer goods and hotel rooms, earning a profit of ₹12,934.49 crore in a year.<br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755570" hostid="261"></div><br />The simple answer is, market prices in the future and not the past. But the market can be irrational before it gets the price right. Nykaa’s shares price doubled on the first day of trading, but have started to cool off today. <br /><br />                <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87757344" hostid="261"></div><br />So let’s look at what Nykaa is planning for its future and what the analysts expect the future to look like. Founder and chief executive (CEO) Falguni Nayar is doubling down on the high-margin fashion products, compared to an ITC that wants to move away from cigarettes but the other segments yield very little margin.<br /><br /><table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Metric<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nykaa<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITC<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Market capitalisation as of Nov 17<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.03 lakh crore (around $14 billion)<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2.94 lakh crore ($39 billion)<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY21 EBITDA margin <br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.61%<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8.9%<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estimate for EBITDA margin<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">13% FY27 (Bernstein)<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">37.4% by FY24 (S&amp;P Global Market Intelligence)<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estimated revenue growth for next 5 years <br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">65% growth between FY22 to FY27 (Bernstein)<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,85,336 by FY24 (Emkay)<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table><em>*EBITDA stands for earnings before interest, tax, depreciation and amortisation</em><br /><br /><strong>Nykaa Fashion was launched in 2018 as a curated and managed marketplace</strong><br /><br />Nykaa’s profit was down in the three months ending September because Nayar decided now is the time to acquire customers and get them hooked to the brand. It meant spending more on promotions, which would also help sell <a href="https://www.businessinsider.in/business/startups/news/the-cost-of-selling-its-ipo-has-eroded-half-of-nykaas-profit/articleshow/87715261.cms">the IPO at a higher price</a>. <br /><br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755520" hostid="261"></div><br />Nykaa’s marketing expenses surged four-fold but it managed to get 23 million more new users to visit its platform (both fashion and beauty ecommerce verticals) between July and September 2022. The revenue grew nearly 38% compared to the same time last year.<br /><br /><strong>Here’s why Nykaa spending so much building the fashion vertical<br /></strong><br />According to a report by Spark India Consumption, there are several reasons why Nykaa decided to venture into the fashion ecommerce space — including immense market opportunities and the limited competition, especially when it comes to premium clothing brands that sell online. <br /><br />Fast facts about the potential of fashion retail in India<br /><table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Metric<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estimated growth rate<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fashion retail: Market size<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12% compounded annual growth to reach $79 billion till FY19. It declined 35% in 2020 due to the pandemic<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Online fashion retail<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">33% growth in the last 3 years, market size has doubled since 2017<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fastest growing segment<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Footwear and accessories<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total addressable market<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$152 billion<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table><br />Adwaita Nayar, the chief executive of Nykaa Fashion, believes that the trends in the fashion industry change rapidly and therefore an inventory-led model may not work in favour of Nykaa. The same does not stand true for the cosmetics industry. <br /><br />Apart from this, both these verticals cater to the same cohort of customers. Young Indians with “aspirations” and increasing disposable income, a report by Motilal Oswal added. The vertical is set to get a higher tailwind as more young population comes online and the spending capacity in tier-II cities increases, the financial services company added. <br /><br />Nykaa has also been fast to adapt and grab the social commerce opportunity. The company has roped in 1,300 influencers, aside from content marketing, to push its products to peeps on Facebook, Instagram, Twitter and other popular platforms. <br /><br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755491" hostid="261"></div><br />About 2% of Nykaa’s revenue comes from the fashion vertical, as per the company’s red herring prospectus filed last month before hitting the public market. There is a lot of headroom for growth both in terms of revenue and market share. <br /><br />Nayar has also promised that the growth will not be driven by discounts. About 17% of Nykaa’s gross merchandise value (GMV) are sold at full price or at a discount of 10% or lower. Nykaa’s fashion and beauty verticals will move further away from discounts, Adwaita Nayar added in the pre-IPO press conference. <br /><br />But it will be easier said than done. While Nykaa’s cosmetics business is facing competition from Walmart-owned Myntra, Purplle and few other players, its fashion vertical is pitted against e-commerce giants like Amazon, Flipkart, JioMart and more.<br /><br />Despite lower discounts, the company’s average order value was at ₹3,257 in the September quarter across 13 lakh orders. <br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755503" hostid="261"></div><br />Is this growth exciting enough to pay more for every dollar profit from Nykaa, compared to legacy companies like ITC? It’s for the investors to decide.<br /><br />Even then, the comparison should not be done with an ITC or Tata Steel, like the memes have . It has to be compared with other players in similar business. Even on that count, Nykaa’s shares may be a bit expensive, according to analysts at Bernstein who shared the following data in a report dated August 2021.<br /><br /><table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Global beauty and personal care brands<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Forward price to sales* (as of Aug 2021)<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nykaa**<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8.5x<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">L’Oreal<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.8x<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">LVMH<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.1x<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estee Lauder<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5x<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>*Source: Bernstein<br />**The Bernstein report was published before Nykaa’s IPO. <br /><br />The price-to-sales ratio is calculated by taking a company's market capitalisation ⁠— the number of outstanding shares multiplied by the share price ⁠— and divide it by the company's projected total sales for the next 12 months. The lower the ratio, the more attractive the investment.<br /><br /><strong>SEE ALSO</strong><br /><a href="https://www.businessinsider.in/business/startups/news/used-car-startup-cars-24-not-in-a-hurry-for-ipo-like-droom-and-cartrade-com/slidelist/87743891.cms">INTERVIEW: The CEO of the biggest startup in the used car e-tail explains why he is skipping the 2021 IPO frenzy</a><br /><br /><a href="https://www.businessinsider.in/personal-finance/news/now-you-can-invest-in-global-blockchain-companies-through-this-mutual-fund-heres-how-to-do-it/articleshow/87724967.cms">Now you can invest in global blockchain companies through this mutual fund ⁠— here's how to do it</a><br /><br /><a href="https://www.businessinsider.in/cryptocurrency/news/cryptocurrencies-tumble-as-china-continues-its-crackdown-against-mining/articleshow/87738496.cms">Cryptocurrencies tumble as China continues its crackdown against mining</a><br />

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