Nykaa shares increase over 4% as company sees net revenue growth in the mid-20s for Q3

Share prices of FSN E-Commerce Ventures Ltd, the parent company of online and physical fashion retailer Nykaa, rose over 4 percent on January 6 following the company’s business update for the December quarter.

At 10:15 am on January 6, Nykaa shares were trading 4 percent higher at Rs 175.11 per share.

According to an exchange filing on January 5, the company expects its net revenue to grow in the “mid-twenties” even as demand for online fashion remains subdued. Despite the subdued demand, the company said it remains confident of its long-term opportunity.

Nykaa’s revenue growth estimate is higher than consolidated gross merchandise value (GMV) growth during this period, reflecting a positive trend in the GMV to net revenue transition. Nykaa’s beauty segment witnessed growth in the third quarter compared to previous quarters, and its net revenue growth is also likely to be in the “mid-twenties”.

Its GMV growth is likely to be in the “low thirties”, indicating strong momentum across all of Nykaa’s beauty businesses – e-commerce platforms, retail stores, owned brands and eB2B distribution. Nykaa’s eB2B distribution business, “Superstore by Nykaa”, now accounts for 8 per cent of the beauty businesses’ GMV, compared to 7 percent a year ago and now services approximately 2.6 lakh transacting retailers across more than 1,100 cities.

The company’s fashion division is likely to have net revenue growth of around 20 percent, while net selling value (NSV) growth could be in the low-to-mid-teens, indicating continued strong growth in content, marketing and service-related income.