Daijiworld Media Network – Mumbai

Mumbai, May 22: Beauty and fashion retailer Nykaa reported a strong performance for the fourth quarter, driven by robust demand in its beauty segment, improved margins, and a key turnaround in its fashion business. The company’s results prompted several brokerages to revise target prices, though opinions remained divided on valuations and future growth momentum.

Nykaa posted a net profit of Rs 78.4 crore in Q4, registering a sharp jump from Rs 20.3 crore in the corresponding quarter last year. Revenue for the quarter rose 28.4 per cent year-on-year to Rs 2,648 crore, while EBITDA increased 67.2 per cent to Rs 223 crore. The EBITDA margin improved to 8.4 per cent from 6.5 per cent a year ago.

The beauty segment continued to remain the company’s primary growth driver, with segment revenue increasing 27 per cent and Beauty & Personal Care NSV rising 29 per cent. The fashion business also recorded strong momentum, with revenue growing 40 per cent and fashion NSV rising 42 per cent during the quarter.

A major highlight of the results was the fashion business achieving EBITDA break-even for the first time, indicating improved operational efficiency and execution.

Global brokerage Jefferies retained its ‘Buy’ rating on Nykaa and raised its target price to Rs 350 from Rs 315. The brokerage described the beauty business performance as “flawless” and stated that the fashion segment’s break-even milestone suggested the company may have “cracked the code” in the business.

Jefferies also highlighted continued strength in Nykaa’s owned brands portfolio and remained optimistic about the company’s medium-term growth prospects despite elevated valuations.

However, not all brokerages shared the same optimism. Citigroup maintained its ‘Sell’ rating and raised its target price marginally to Rs 225 from Rs 215. Citi noted that margins exceeded expectations due to lower fixed operating costs, reduced losses in the fashion business, and improved operating leverage.

Macquarie also retained its ‘Underperform’ rating with a target price of Rs 210. While acknowledging healthy beauty margins, strong demand trends, and fashion EBITDA break-even, the brokerage expressed concerns over slowing growth in beauty advertising income and moderation in the growth of Nykaa’s own beauty brands amid a challenging macroeconomic environment.