Nykaa's Q3 FY24 witnesses a remarkable surge in the fashion vertical, with an anticipated year-on-year GMV growth of around 40%.

In its Q3 FY24 performance update, Nykaa, a prominent beauty and fashion e-commerce player, reported consistent growth across its three business verticals. Despite improvements in long-term macro indicators, the company acknowledged that discretionary consumption faced short-term pressures during the quarter.

Following Nykaa’s exchange filing on Sunday (January 7), its shares experienced a nearly 5% surge to INR 182 during Monday’s intraday trading hours. By 2.45 PM IST, the shares moderated to a 2.5% increase, trading at INR 177.7 on the BSE.

Nykaa Fashion sustained its positive momentum from the previous quarter, achieving robust growth in Q3. The fashion vertical’s gross merchandise value (GMV) for the quarter is anticipated to grow by approximately 40%, with net sales value (NSV) expected to experience low thirties year-on-year (YoY) growth. In the corresponding quarter of FY23, the GMV for Nykaa Fashion was INR 724.4 Cr, with an NSV of INR 210 Cr.

While Nykaa Fashion faced challenges in Q3 FY23, it has regained momentum since the last quarter. In Q2 FY24, GMV grew by 27% YoY to INR 762.8 Cr, and NSV surged by 32% YoY to INR 232.1 Cr.

On the other hand, Nykaa’s beauty and personal care (BPC) business continued to experience pressure. 

The BPC vertical’s GMV growth for Q3 FY24 was projected to be in the mid-twenties, with NSV growth at around 20% on a YoY basis. In Q3 FY23, the BPC vertical GMV was INR 1,901.4 Cr, and NSV was INR 1,151.3 Cr. In the last reported quarter, Q2 FY24, Nykaa’s GMV for the BPC segment was INR 1,850.8 Cr, and NSV was INR 1,167.5 Cr.

Nykaa stated that its quarterly BPC growth surpassed industry growth, although it acknowledged that the current industry growth was below the long-term trajectory. Considering the solid macroeconomic and demographic outlook, the company expects the industry to revert to the median near to mid-term.

Nykaa attributed the difference in GMV and NSV growth in the BPC business during the quarter to brand-led pricing and discounting, particularly in mass and masstige categories. Despite this, the underlying order volume growth remained healthy and consistent, reflecting strong customer demand.

It is worth noting that Nykaa’s Q3 FY24 is expected to receive a boost as the festive season fell within the quarter. The third vertical, Superstore By Nykaa, experienced high growth and now holds a meaningful share in the company’s overall NSV.

At a consolidated level, Nykaa anticipates its NSV to grow in the mid-twenties and revenue to grow in the low twenties on a YoY basis for Q3 FY24. In Q3 FY23, Nykaa reported an overall GMV of INR 2,796.5 Cr and an operating revenue of INR 1,462.8 Cr. Yet, the consolidated net profit for the same quarter experienced a YoY decline of 70.7%, reaching INR 8.5 crore. This contrasts with Nykaa’s Q2 FY23 profit, which stood at INR 7.8 crore.