Nykaa – The Make Up Company

Notes from Conf Call, Investor Presentation, and Q2FY22 results.

Consolidated Revenue from Operations grew 39% YoY.
A portion of the MD and CEO’s comment: Consumer demand for premium beauty, personal care, and wellness is showing signs of buoyancy as we gear up for a promising H2 FY23. We are investing in growth engines of the future, particularly SuperStore by Nykaa. The International business which includes the venture we have with the Apparel Group in the GCC, is promising.

• BPC: Physical Stores: 121 across 53 cities. Plan to open 300+ stores across 100 top cities. Store location and stock-up based on demand analytics from the platform
• Fashion: NSV growth of only 20% in Fashion. Rationale – Increased returns compared to Covid period, but as per norm of the historical data. Calibrated approach – choose the right customer, ensure positive contribution margin, and right shift marketing initiative to take advantage of upcoming bigger sales season in Q3.
• International business: Partnership with Apparel Group: Beauty market 2x that of India. However, well entrenched with existing offline players. Plan to implement like a start-up business. Yet to develop a clear path of execution. Hope to do physical rollout in 12 months. E-Com might take more time.
• eB2B: Doing well and scaling up aggressively. At steady state (few years away), business will be negative WC.
• Increasing own brand contribution in the revenue. Hence, scale up in gross margins.

My Opinion:

• The ongoing growth rate shall continue.
• Profitability will remain debatable due to continuous investment for future growth.
• In this quarter, BPC OPM is now @ 12% [With Contribution Margin already provided, I assumed employee cost as 7.3% of BPC revenue (basis FY22 investor presentation), and other Expenses @ 88% (% of BPC revenue in the overall revenue)].

Disc: Invested.