Nykaa’s Q2 Profit Zooms 66% To INR 13 Cr

SUMMARY

• Nykaa's consolidated net profit surged 66.3% to INR 12.97 Cr in Q2 FY25 from INR 7.8 Cr in the year-ago period
• Revenue from operations jumped 24.4% to INR 1,874.74 Cr during the quarter under review from INR 1,746.11 Cr in Q2 FY24
• Nykaa’s GMV increased 24% YoY to INR 3,652.5 Cr from INR 1,746.11 Cr in Q2 FY24

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Beauty and fashion ecommerce major Nykaa’s consolidated net profit surged 66.3% to INR 12.97 Cr in the second quarter of the financial year 2024-25 (Q2 FY25) from INR 7.8 Cr in the year-ago period, as the beauty and personal care (BPC) vertical delivered strong growth. 

However, profit declined 4.9% from INR 13.64 Cr reported in the preceding June quarter.

Revenue from operations jumped 24.4% to INR 1,874.74 Cr during the quarter under review from INR 1,746.11 Cr in Q2 FY24. On a quarter-on-quarter (QoQ) basis, revenue increased 7.2% from INR 1,753.44 Cr. 

Nykaa’s cumulative customer base for its BPC and fashion verticals grew 31% YoY to 3.72 Cr from 3.32 Cr at the end of the year-ago quarter.  

Earlier this month, the company had said that it was expecting to report a growth in the “mid-twenties” range on its revenue. 

According to Nykaa’s investor presentation for the September quarter, the company’s gross merchandise value (GMV) increased 24% year-on-year (YoY) to INR 3,652.5 Cr. EBITDA jumped 29% to INR 103.7 Cr from INR 80.6 Cr in Q2 FY24. EBITDA margin also improved 18 basis points YoY to 5.5%. 

BPC Vertical Steals The Show

The BPC vertical reported a 24.3% YoY increase in its revenue to INR 1,702.89 Cr. The vertical’s EBITDA for the quarter stood at INR 134.4 Cr, up 21.2% from INR 110.8 Cr in Q2 FY24. However, EBITDA margin contracted to 8.6% from 8.8% in the corresponding quarter last year.  

The company said that its investment in new customer acquisition is paying off, with the number of new customers growing 31% YoY in Q2 FY25. 

Nykaa continued to expand its physical presence in India for its beauty offerings in Q2. At the end of the September quarter, the company said that its physical store count expanded to 210 from 165 stores a year ago. 

Nykaa’s beauty stores – Nykaa On Trend, Nykaa Luxe and Nykaa Kiosk – are spread across 2 Lakh sq. ft. retail space in 72 Indian cities. The physical channel contributed 8.2% to Nykaa’s omnichannel beauty GMV.

For its online platform, the company continued to cut delivery timelines. Nykaa said that its same day delivery and next day delivery logistics cover 80% of deliveries in Top 12 cities and 70% in Top 110 cities.  

While the company is focused on reducing its timeline for deliveries, it was also reported to be foraying into 10-minute deliveries for its beauty products. In October, reports said that the company launched a 10-minute delivery pilot in select parts of Mumbai covering 5% of its SKU base. 

Later in the month, founder and CEO Falguni Nayar said that Nykaa will focus on addressing consumer demand on quick deliveries once the sector reaches a certain size and scale.

Nykaa’s international beauty business also brought in INR 5.76 Cr during the quarter, marking a YoY growth of 476% from the INR 1 Cr it raked in in the same period previous year. Despite the growth, the company incurred a loss of INR 6.63 Cr from its international business. 

It is pertinent to note that the company incorporated a wholly-owned subsidiary in Saudi Arabia, Nysaa Trading LLC to expand its market beyond domestic borders.

Fashion Vertical Continued To Be The Laggard 

The fashion vertical continued to be behind BPC in terms of growth. However, the segment’s revenue grew 21.7% YoY to INR 166.10 Cr in Q2 FY25.

Nykaa also trimmed the EBITDA loss of the fashion segment by 19.2% to INR 24.4 Cr from an EBITDA loss of INR 29.1 Cr in Q2 FY24. EBITDA margin of the segment improved to -9% from -12.1% in the year-ago quarter.

The fashion vertical’s GMV rose 10% to INR 863.3 Cr during the quarter from INR 787.2 Cr in Q2 FY24. The company said that its GMV mix was dominated by new customers in the quarter. 56% of Nykaa fashion’s GMV came from new customers as against 46% in the same quarter last year. 

The quarter saw Nykaa expand its brand portfolio for the fashion vertical with the addition of 260 new brands like Libas, Freakins, Sage, among others. 

Where Did Nykaa Spend?

In line with the rise in sales, total expenses jumped 23.7% year-on-year (YoY) and 7.3% QoQ to INR 1,858.93 Cr.

Purchase Of Traded Goods: This continued to be Nykaa’s biggest spend in the second quarter of the fiscal year. The company spent INR 1,086.08 Cr under this head, up over 96% from INR 553.02 Cr it spent in Q2 FY24.

Employee Benefit Expenses: The BPC major spent INR 161.49 Cr on its employees in Q2 FY25, up 18.5% from INR 136.32 Cr it spent last year. 

Marketing & Advertising Expense: Nykaa’s promotional expenses shot up 38% to INR 227.4 Cr from the INR 164.8 Cr it spent in Q2 FY24. 

The company released its Q2 numbers after market hours. Shares of Nykaa ended today’s trading session 2.66% lower at INR 177.65 on the BSE.