Nykaa Q1 Review - Beauty Fires Again, Fashion Growth Slows As Profitability In Limelight: ICICI Securities

ICICI Securities Report

FSN E-Commerce Ventures Ltd.’s core beauty business strengthened, as management focused on improving mix (luxury fragrances gross merchandise value grew 74% YoY) and reinvested to accelerate growth (marketing spends up ~60 basis points YoY, transacting consumers up 21% YoY).

Ad revenues grew ~44% YoY in Q1 FY25, which we believe is a key positive for the stock. Fashion net sales value grew 17% YoY despite a smaller base, as Nykaa focused on profitability and reduced performance marketing spends (fashion MAUV -5% YoY, ad spends -110 bps YoY and Ebitda margin +500 bps YoY).

We believe management is trying to focus only on acquiring high-quality consumers in fashion (annual unique transacting customer up 19.2% YoY and annual order value up 4.4% YoY). However, at this rate, meeting their growth guidance of two–three times fashion NSV in three years may be a challenge. Maintain Add.

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