Beauty and fashion e-tailer FSN E-commerce Ventures’ (Nykaa) share price declined to the tune of 6.22% on Tuesday’s trades. This happened after the company’s net profit for the third quarter nose-dived, leading to investor disappointment.
Analysts said that the company’s results were a mixed bag. It met growth expectations, but its margins undershot for both of its business segments — beauty and fashion.
Nykaa reported a 70.67% decline in its net profit at ₹ 8.19 crores in the latest quarter, against 27.63 crores in the same quarter last year. However, its EBITDA (Earnings before interest tax depreciation and amortization) rose 37% year-on-year (YoY) to ₹ 2796.50 crores.
The company’s revenue from operations increased 33 percent to ₹ 1462.82 crores as compared to ₹ 1098.36 crores in the same quarter a year ago. Nykaa’s gross merchandise value (GMV) increased 37% year-on-year (YoY) to ₹ 2796.50 crores.
Kotak Institutional Equities
Kotak Institutional Equities said that Nykaa posted lower-than-expected revenue growth of 33 per cent YoY on account of weak seasonality (shift of sales away from Q3) and some slowdown in discretionary consumption.
“Investments in e-B2B, offline store expansion and warehousing will continue; most of this will be from BPC business cashflows. We increase estimate of loss from the fashion business, which results in a 3-4 per cent Ebitda cut for FY2024-25E. We retain BUY with a revised FV of Rs 215 from Rs 230 earlier,” it said.
The target of ₹ 215 per share translates to an upside of 49.57% as compared to its share price of ₹ 143.75 at 03:15 PM on Tuesday.
JM Financial
JM Financial said despite a decline in contribution margin, the EBITDA margin saw a slight sequential improvement of 37 bps due to operating leverage. It said that the company continued omnichannel expansion with 153 stores in 56 cities along with 37 fulfilment centres in 15 cities to get closer to its customers.
JM Financial retained a ‘buy’ rating on the shares of FSN E-commerce Ventures with a target price of ₹ 250. This translates to an upside of 73.91% as compared to its share price.
Written by Simran Bafna
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