Nykaa shares jump over 5% on hopes of ‘higher than mid-20s’ net revenue growth in Q3

Consolidated net revenue growth of FSN E-Commerce Ventures along with its subsidiaries is expected to be ‘higher than mid-20s’, the company said in its quarterly business update issued on January 5. This indicates an expected revenue growth in the range more than 25% but less than 30%.

“This is higher than the consolidated GMV (gross merchandise value) growth for the same period, indicating positive trend in GMV to net revenue translation,” Nykaa said in the stock exchange filing.

Reacting to the development, Nykaa shares rose as much as 5.2% on Monday to hit an intra-day high of ₹176.6 apiece on the National Stock Exchange of India (NSE). The stock has been an underperformer in the past one year, slipping more than 1% during this period compared with an 11% increase in the benchmark Nifty 50 index.

In its business update, Nykaa said that its beauty vertical growth has accelerated compared with the previous quarters, with net revenue growth higher than mid-20s. The GMV growth for the beauty vertical is expected to be in the low 30s, indicating strong momentum in all its beauty businesses – ecommerce platform, retail stores, owned brands and eB2B distribution.

Nykaa said that customer acquisition was also accelerating. The eB2B distribution business, Superstore by Nykaa, now services around 260,000 transacting retailers across more than 1,100 cities.

Regarding the company’s fashion vertical, Nykaa said that it expected the business to deliver net revenue growth of around 20%, while NSV (net sales value) growth is likely to be around low to mid-teens during the December quarter. “This indicated continuing strong growth in content, marketing and service-related income,” the company said.

“We believe online fashion demand continues to be subdued, but we remain optimistic about the long-term growth opportunity,” the company added.

Shares of Nykaa were trading 4.07% higher at ₹174.67 apiece on the NSE at 11:31 am.