- Healthy growth in advertising revenue; gross margins to improve
- Superstore business has GMV potential of $ 3–4bn; 4–6% EBITDA margin
- Gross margin improvement to higher own brands share
The company initially started with a focus on premium or luxury brands. It has expanded into the mass market, private labels, physical retail and even apparel. Let’s not forget that Nykaa is one of the few profitable new-age companies.
The management said they will continue to focus on growing core businesses as well as diversifying into newer verticals to expand the total addressable market where the market and customer fit.
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Nykaa is already a dominant player with BPC now focusing on leveraging its personal care segment to leverage its existing beauty users. Now with this increased focus on personal care, there will be a change in the mix but management reassures that personal care and beauty have similar margins and the mix will not change marginally-dilutive
Furthermore, they also talked about their SuperStore strategy. The management highlights that this will not require much working capital investment.
They are looking to target 500k retail outlets, the addressable market being USD3-4bn GMV opportunity in the first phase. At scale, this business could generate a 10-12% gross margin and 4-6% EBITDA margin, with low investments.
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