Nykaa, India’s largest beauty and fashion platform, said today that it has seen significant topline and bottom-line revenue and profit growth during the quarter ended September 2022, supported by a focus on building an omnichannel approach and systematic investments.
The company announced its latest quarterly performance wherein the revenues from operations of the company have increased by 24.4% to Rs 1,874.74 crore, against Rs 1,507 crore in Q2 FY24. This growth saw the company notch a 66.3% rise in profits at Rs 12.97 crore, marking a double-digit growth over a year ago, up from Rs 7.8 crore. Aided by corresponding unaudited consolidated statements furnished to the Bombay Stock Exchange (BSE), the financial data reflects that Nykaa has always reflected rich growth in each segment of revenues.
Beauty Segment Remains Dominant, While Fashion Sees Steady Growth
The principal source of revenue for the company also remained its beauty business which accounted for 91% of its operating revenue, or Rs 1,705.89 crore. This reflected a YoY growth of 24.56%. The fashion segment too has posted growth, though that was at a relatively more sedate rate of 21.68%, at Rs 166.09 crore for the quarter. Nykaa’s total income in Q2 FY25 was at Rs 1,880 crore with other sources bringing in a small Rs 5.3 crore for the quarter.
An operating marketplace with categories including beauty, wellness, and fashion, and with products offering both premium and in-house brands. Nykaa has a private label portfolio of skincare brands Dot & Key and Earth Rhythm, jewelry brand Pipa Bella, and fashion retailers such as Gajra Gang and Kica. It will be recalled that, during Q1, Nykaa had hiked its stake in Dot & Key to 90% by raising Rs 265.3 crore for skin care.
Increased Operational Expenses and Strategic Spends
As the business for Nykaa continued to rise, so did its costs. In Q2 FY25, the company’s expenses increased by 23.74% year-on-year to Rs 1,858.93 crore from Rs 1,502.33 crore recorded a year ago. Material cost was the top expense with 56.68% of the total expense, increasing 22.9% at Rs 1,053.72 crore. Employee benefits too increased by 18.46% to Rs 161.49 crore while depreciation increased by 16.46% to Rs 63.62 crore. Lastly, there was an undisclosed cost of Rs 580.1 crore in the books of Nykaa.
Even though the costs had escalated, strategic investments had been worthwhile for the company. Nykaa had brought a 2.88% return on capital employed as well as an EBITDA margin of 5.8%. The company was efficient enough as it spent Re 0.99 to generate each rupee of operating revenue.
Market Position and Competitors
Another section where Nykaa faces brutal competition from such powerful e-commerce players including Amazon, Flipkart, and Myntra, besides niche beauty and fashion platforms like Purplle. Still, Nykaa has managed to hold its grip due to its omnichannel capabilities by giving an uninterrupted experience both online and offline to the customers.
Nykaa ended the day at Rs 179.01 with a market capitalization of Rs 51,151 crore, which essentially speaks to the strength of the standalone player in the Indian beauty and fashion markets. Through its omnichannel approach with honest investments, Nykaa captures a huge share of an increasingly competitive landscape, getting ensconced as an important player in India’s beauty and fashion industry.
