In an April update to the stock exchanges, Nykaa said its beauty and personal care unit is rising well ahead of the industry. That is despite competition from Reliance’s Tira and Walmart’s Myntra.
FSN E-Commerce Ventures, the operator of the beauty and personal care (BPC) platform Nykaa, has reported a significant rise in net profit for the quarter ending 31 March 2024.
The company’s net profit surged over fourfold to Rs 9 crore from Rs 2 crore in the same period the previous year, driven by enhanced customer acquisition efforts and increased platform conversions.
Financial Performance
Nykaa, led by Falguni Nayar, posted a revenue of Rs 1,668 crore for Q4FY24, marking a 28% increase from Rs 1,302 crore in the corresponding quarter last year.
However, on a sequential basis, the company’s revenue was slightly down from Rs 1,789 crore recorded in Q3FY24, and the profit also decreased from Rs 17 crore in the same period.
Growth Amid Competition
In an update released in April, Nykaa highlighted that its BPC division is outpacing industry growth despite facing intensified competition. Competitors like Reliance Retail’s Tira and Walmart-owned Myntra are increasingly challenging Nykaa’s market share.
According to a Bank of America (BofA) note dated May 21, Myntra has made significant inroads into the BPC market. Survey results showed that 19% of users now prefer buying BPC products on Myntra, reflecting its growing presence.
Additionally, new entrants like Myntra are attracting customers who previously shopped on platforms like Flipkart and Amazon, offering better discounts and alternatives to Nykaa.
User Preferences
The BofA note also indicated that while Nykaa remains the preferred platform, 37% of surveyed users have started shopping more on Reliance Industry Limited’s Tira. An additional 31% have visited Tira and occasionally shop there based on discounts and prices.
Stock Market Reaction
FSN E-commerce’s shares closed at Rs 179.35 on the BSE on May 22, up 1.2% from the previous close, reflecting investor confidence in the company’s performance and growth strategy despite the competitive landscape.
Outlook
As Nykaa continues to navigate the competitive BPC market, its focus on customer acquisition and platform optimization will be crucial. The company’s ability to maintain its market leadership while facing new and formidable competitors will determine its future growth trajectory.
