Beauty retailer ‘s shares opened more than 4% lower at Rs 144.75 apiece on Tuesday as the company posted a steep 71% slide in Q3 net profit compared to the year-ago period, hurt by heavy discounts and lower discretionary spending in the quarter.
The Mumbai-based ecommerce firm’s expenses rose 36% year on year to Rs 1,456 crore. Higher employee benefits costs and other expenses dragged Nykaa’s EBITDA margin down to 5.3% from 6.3% a year earlier.
On Monday, Nykaa’s shares fell 2.68% to close at Rs 150.55 apiece ahead of the results announcement. The stock has been down 7.43% since the beginning of the year.
“The confluence of both growth and profitability would be critical for valuations to improve. Besides the gross margin miss, an aberration as per management, must reverse, else any structural impact could negate benefits in marketing and fulfilment,” said Nihal M Jham, Vice President, Nuvama Institutional Equities, told YourStory.
“In a quarter rampaged by a tougher macroeconomic environment, Nykaa reported substantial growth in Q3 FY23 numbers, driven by an increase in GMV in BPC (beauty and personal care), fashion, and other segments,” said JM Financial, in a note.
“We continue to see increased strength of the dominant positioning in BPC vertical while the newcomer, fashion vertical, has gained market share at the cost of a sharp dip in contribution margin.”
