Nykaa Q3 results: Net profit doubles to Rs 16.19 cr on festive demand

India's FSN E-Commerce Ventures, parent of online beauty products seller Nykaa, reported a nearly two-fold jump in quarterly profit on Tuesday on festive demand and said that its board approved the demerger of its business-to-business (B2B) segment.

The company's consolidated net profit rose 97% to 161.9 million rupees ($1.95 million) in the third quarter ended Dec. 31. It had posted a drop in net profit in three of its previous five quarters.

E-commerce companies rolled out multiple sales events in the quarter thanks to a delayed festive season that included festivals such as Dussehra and Diwali beginning in October.

The festive season in India brings in the lion's share of annual sales for retailers like Nykaa, which counts Tata Sons' Tata Cliq and Reliance's Tira among its competition.

Nykaa's earnings before interest, tax, depreciation and amortization margin grew to 5.5% from 5.3% a year ago while its overall gross merchandise value (GMV) - the monetary value of all its orders - grew 29% to 36.19 billion rupees.

The company's beauty and personal care (BPC) segment, the biggest in terms of revenue contribution, recorded a 25% uptick in GMV.

India's wedding season, which begins in December, also buoyed demand. Last quarter, the BPC segment dragged Nykaa's revenue to its slowest growth since listing.

Overall revenue for the retailer, which houses luxury brands such as Estee Lauder, Bobbi Brown and Dior, rose around 22% year-on-year, but stayed flat sequentially.

Its electronic B2B segment, Superstore by Nykaa, recorded a 68% year-on-year growth in GMV, the company said.

The business received board approval to be spun out into a separate unit called Nykaa E-Retail, to be housed under parent FSN E-Commerce, it added. It was not immediately clear how much the B2B segment contributed to Nykaa's total revenue.

Additionally, the company approved further investment in unit Nykaa Fashion via a rights issue worth 1.5 billion rupees. It also approved FSN's acquisition of the unit's lingerie and athleisure business on a slump-sale basis for 2.29 billion rupees.