Delivering growth with strong focus on profitability
Dear Shareholders,
We are pleased to highlight that financial year 2024 was yet another year, where we
were able to deliver strong financial performance. The financial year gone by had its own
challenges like continuing inflationary pressures which have impacted consumer demand for
discretionary categories. Despite the challenges, we delivered a sustainable and
profitable growth through our focus on serving the right customers, investment in category
building and content awareness and improving the assortment of offerings by bringing best
brands from across the world. Toward the end of the year, we accelerated our focus on
customer acquisition through strong campaigns to uplift the lifestyle purchase journey of
our customers. Our focus on customer acquisition will remain strong as we currently serve
a little more than 1/3rd of the total Beauty & Personal Care (BPC) customer
base in India, providing us the opportunity to penetrate further in this evolving and
aspirational category.
Our Consolidated GMV grew by 28% YoY, to reach Rs.124 billion in FY2024, led by ahead
of industry growth in both BPC and Fashion business verticals. Our investment focus in
ramping up our infrastructure and employee strength across businesses in the previous
financial year helped in driving benefit in operating costs in FY2024.
In FY2023, we invested heavily in scaling up our fulfilment capabilities by expanding
our warehousing capacity by 78%. This enables us to get closer to the customer, thereby
improving customer experience by reducing delivery timeline and providing cost
efficiencies due to reduced air shipments.
This regionalised fulfilment strategy helped us reduce our fulfilment expenses
significantly from 10.9% of revenue in FY2023 to 9.5% in FY2024. Our ahead of the curve
investment in employees also delivered scale efficiencies in FY2024, leading to
improvement from 9.6% of revenue in FY2023 to 8.8% in FY2024.
With a strong focus on driving efficiencies in our operating expenses, we delivered an
EBITDA of Rs.3,462 million in FY2024, which is a 35% YoY growth, growing ahead of our
revenue. Our Profit after tax (PAT) improved 90% YoY, reaching Rs.397 million in FY2024,
despite the high depreciation impact due to our peak capex investment in FY2023.
Post Covid, in FY2023 we ramped up our infrastructure on warehousing, offices and
stores. During FY2024, we continued to invest in physical store expansion as well on
strengthening our technology capabilities, with the peak investment largely behind us. Our
capex in FY2024 was down by 49% YoY at Rs.1,150 million vs Rs.2,235 million in FY2023.
Accordingly, over the next couple of years, the depreciation impact can be expected to
normalise.
We achieved strong growth across all our verticals.
Our Beauty vertical achieved an industry leading growth in FY2024 growing 25% YoY, to
cross the $1 billion GMV milestone. Through operating leverage, Beauty vertical
maintained a healthy contribution margin of 25.5% (as % to NSV) in FY2024. We also
strengthened its omnichannel presence with our physical store count of 187 across 68
cities in the country making us the largest specialised beauty offline retailer in India.
In an environment where fashion industry growth was subdued, our Fashion vertical was
able to deliver strong growth, led by our position as the premium women's fashion
destination. Fashion GMV grew by 27% YoY, to reach Rs.32,699 million in FY2024.
The Fashion business is showing consistent improvement in profitability reflecting the
strength of our platform and quality of our customers. Contribution margin as a % to NSV
for Nykaa Fashion improved to 4.9% in FY2024 vs 2.2% in FY2023. This was supported by
strong leverage from fulfilment and marketing expenses.
Nykaa distribution business - Superstore by Nykaa has now well established its unique
position of being India's only specialised beauty B2B platform. Superstore witnessed
strong GMV growth of 84% YoY to reach H5,973 million in FY2024.
The distribution business has achieved scale with improving profitability as
contribution margin (as a % to NSV) improved 919 bps YoY, from -27.4% in FY2023 to -18.2%
in FY2024. This was supported by better unit economics resulting from optimisation of
fulfilment and selling & distribution expenses.
During FY2024, we successfully launched our omnichannel beauty platform —
"Nysaa" in the GCC region. We launched our ecommerce platform, Nysaa. com
along with our first Nysaa store at City Centre Mirdif, Dubai. GCC has the highest BPC per
capita spend of $500+ and offers Nysaa an opportunity to replicate Nykaa's successful
omnichannel model.
In FY2024, we undertook a few restructuring initiatives towards bringing operational
synergies by streamlining business operations across entities -
+ We successfully completed consolidation of the Athleisure and Lingerie business of
Nykaa Fashion Limited into FSN E-commerce Ventures Limited. This will help consolidate and
streamline owned brand business in a single entity, similar to beauty owned brands
business which is already housed within FSN E-commerce Ventures Limited.
+ We have also received Board approval for consolidating Iluminar Media Limited (LBB)
with Nykaa Fashion Limited. The proposed merger will drive synergies in technology
infrastructure, collaboration with brand partners as well as content creation/marketing
for all our businesses. The scheme is subject to necessary regulatory and stakeholder
approval.
+ The Board has approved demerger of eB2B business "Superstore by Nykaa" from
FSN Distribution Limited to Nykaa E-Retail Ltd. This will help consolidate our online
beauty business. The proposed demerger will drive synergies in two businesses which have
common physical and technology infrastructure, and brand partners as well as engage in the
retail/distribution of common products. The scheme is subject to necessary regulatory and
stakeholder approval.
+ Our constant endeavour to drive sustainable and profitable growth embodies Nykaa's
values. Our unwavering focus on operational efficiency, innovation, and
customer-centricity has been instrumental in maintaining our competitive edge. I extend my
best wishes to everyone as Nykaa remains committed to delivering value to our
stakeholders.
P Ganesh
Chief Financial Officer
Chairman.