Nykaa Q3 update out. Is it wise to buy Nykaa shares ahead of Q3FY25 results?

Following the release of a significant Q3 update for the fiscal year 2024-25, Nykaa’s share price opened higher on Monday and reached an intraday peak of ₹176.60 per share shortly after the stock market’s Opening Bell. Maintaining its remarkable growth supported by significant revenue increase, FSN E-Commerce Ventures Ltd, known as Nykaa, announced an extensive Q3 update for the ongoing financial year on Sunday. The Fashion sector is projected to achieve Net Revenue growth of approximately 20%. Conversely, NSV growth is expected to be in the low to mid-teens, suggesting robust growth in content, marketing, and service-related revenue.

Stock market analysts suggest that Nykaa’s share price could keep rising and reach ₹185 per share shortly. They recommended that Nykaa shareholders retain the stock until the announcement of Nykaa Q3 results for 2024-25. They also recommended new investors to purchase Nykaa shares for a short-term goal of ₹185 each.

Commenting on Nykaa’s Q3 update for the ongoing financial year, Anshul Jain, Head of Research at Lakshmishree Investment and Securities, stated, “Nykaa consistently shows remarkable growth, with revenue increase surpassing consolidated Gross Merchandise Value (GMV), indicating improved GMV-to-net-revenue conversion. The beauty segment continues to be the main catalyst, with GMV expected to increase in the “low thirties” and net revenue anticipated to exceed “mid-twenties,” driven by robust results in e-commerce, retail locations, proprietary brands, and eB2B distribution.

“Superstore by Nykaa,” the firm’s eB2B venture, currently represents 8% of beauty GMV, rising from 7% last year. It caters to 2.6 lakh retailers in over 1,100 cities, emphasizing its expanding presence. Recommending a buy-on-dips approach for Nykaa shares, Mahesh M Ojha, AVP — Research at Hensex Securities, stated, “Nykaa shares have established a solid foundation in the ₹166 to ₹168 range.” The fashion stock encounters a barrier at ₹175 on the upside. Nykaa’s stock price could reach ₹185 each if it surpasses this barrier. Therefore, Nykaa shareholders are recommended to retain their shares until the announcement of Nykaa’s Q3 results for 2024. The shares could reach ₹185 before the fashion brand’s third quarter results.

Nykaa (FSN E-Commerce Ventures Limited and its subsidiaries) experienced robust results in Q3 FY2025, with consolidated Net Revenue growth anticipated to exceed the mid-twenties. This surpasses the consolidated GMV growth for the corresponding timeframe, showing a favorable trend in the conversion from GMV to Net Revenue. Nykaa’s beauty segment growth has intensified in comparison to earlier quarters, showcasing net revenue growth that surpasses the mid-twenties. The growth in GMV for the beauty sector is anticipated to be in the low thirties, reflecting robust momentum across all of Nykaa’s beauty operations – e-commerce platform, retail outlets, owned brands, and eB2B distribution. Customer acquisition at Nykaa keeps speeding up. The eB2B distribution sector – Superstore by Nykaa, which represents 8% of the beauty vertical’s GMV (compared to 7% last year), continues to experience swift growth and currently serves approximately 260,000 active retailers across over 1,100 cities.

The Fashion sector is projected to achieve a Net Revenue increase of approximately 20%. Conversely, NSV growth is expected to be in the low to mid-teens, reflecting ongoing robust expansion in content, marketing, and service-related revenues. The demand for online fashion remains low, yet we are hopeful about the potential for long-term growth.