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Equity Bottom-Up

FSN E-Commerce Ventures (Nykaa) / Equity Bottom-Up

<ul><li>The note ponders the odds of delivery for each segment of Nykaa juxtaposed against its stated ambition</li><li>The BPC ambition of achieving mid-late 20s growth over FY24-28 seems aggressive but plausible (built-in 25% CAGR)</li><li>We expect the focus to shift to customer acquisition amid rising competitive intensity in BPC, compared to the focus on milking existing customers over FY21-24</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The note ponders the odds of delivery for each segment of Nykaa juxtaposed against its stated ambitionThe BPC ambition of achieving mid-late 20s growth over FY24-28 seems aggressive but plausible (built-in 25% CAGR)We expect the focus to shift to customer acquisition amid rising competitive intensity in BPC, compared to the focus on milking existing customers over FY21-24Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Fsn E-Commerce Ventures: BPC Ambition Plausible, Fashion’s a Stretch Though.

<ul><li>We recently interacted with Team Nykaa</li><li>Key takeaways from the interaction: (1) Nykaa’s run rate of 4-5mn customer additions annually in BPC (on a cumulative base of 18mn) remains on track (2) ad income dip (as % of revenue) is attributed to teething issues with the new ad tech stack recovery could be a quarter away (3) Fashion’s soft Q1 performance (12% YoY) was an aberration and growth has been trending upwards (4) Fashion business is over its peak investment phase</li><li>However, we suspect BPC cash generation is just about enough to fund growth in Fashion and B2B businesses in FY24</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We recently interacted with Team NykaaKey takeaways from the interaction: (1) Nykaa’s run rate of 4-5mn customer additions annually in BPC (on a cumulative base of 18mn) remains on track (2) ad income dip (as % of revenue) is attributed to teething issues with the new ad tech stack recovery could be a quarter away (3) Fashion’s soft Q1 performance (12% YoY) was an aberration and growth has been trending upwards (4) Fashion business is over its peak investment phaseHowever, we suspect BPC cash generation is just about enough to fund growth in Fashion and B2B businesses in FY24Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Fsn E-Commerce Ventures - BPC Momentum Key to Success. Maintain REDUCE

Thematic (Sector/Industry)

<ul><li>We recently interacted with numerous store managers and companies to assess the festive performance and demand in discretionary categories</li><li>Despite a promising start to the festive season, most categories (excluding jewellery and travel) seem to have hit the snooze button</li><li>Several factors contribute to this, including (1) the normalisation of ticket sizes and purchase frequencies, (2) weak footfalls (on a per sq foot basis), and (3) a trend towards downtrading</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We recently interacted with numerous store managers and companies to assess the festive performance and demand in discretionary categoriesDespite a promising start to the festive season, most categories (excluding jewellery and travel) seem to have hit the snooze buttonSeveral factors contribute to this, including (1) the normalisation of ticket sizes and purchase frequencies, (2) weak footfalls (on a per sq foot basis), and (3) a trend towards downtradingContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Festive temperature check: Festive mood sombre

<ul><li>Berger Paints: BRGR grew 9.8% growth YoY to INR30.3bn (broadly in-line HSIE: INR30bn)</li><li>Decorative business grew 11.4% (~14% volume growth)</li><li>Industrial businesses performed well, aided by improved realization</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Berger Paints: BRGR grew 9.8% growth YoY to INR30.3bn (broadly in-line HSIE: INR30bn)Decorative business grew 11.4% (~14% volume growth)Industrial businesses performed well, aided by improved realizationContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Berger Paints, Infoedge, Astral, Fsn E-Commerce Ventures (Nykaa)

<ul><li>Our discretionary universe is expected to grow by ~15% YoY in Q1FY24</li><li>However, beneath the averages lies the rub</li><li>Excluding 3 companies the average drops to sub 10%</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Our discretionary universe is expected to grow by ~15% YoY in Q1FY24However, beneath the averages lies the rubExcluding 3 companies the average drops to sub 10%Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Discretionary: Beneath the averages lies the rub

India

FSN E-Commerce Ventures Private Limited providese-retailing beauty and personal care solutions. The Company offers comprehensive selection of makeup, skin and hair care, bath body, fragrance, grooming appliances, personal care, and health and welness categories. FSN E-Commerce Ventures serves customers worldwide.

FSN E-Commerce Ventures (Nykaa) (NYKAA IN)

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FSN E-Commerce Ventures (Nykaa) (NYKAA IN)

Fsn E-Commerce Ventures: BPC Ambition Plausible, Fashion’s a Stretch Though.

We expect the focus to shift to customer acquisition amid rising competitive intensity in BPC, compared to the focus on milking existing customers...

HDFC Securities

Fsn E-Commerce Ventures - BPC Momentum Key to Success. Maintain REDUCE

Key takeaways from the interaction: (1) Nykaa’s run rate of 4-5mn customer additions annually in BPC (on a cumulative base of 18mn) remains on track

HDFC Securities

Festive temperature check: Festive mood sombre

We recently interacted with numerous store managers and companies to assess the festive performance and demand in discretionary categories

HDFC Securities

HSIE Results Daily: Berger Paints, Infoedge, Astral, Fsn E-Commerce Ventures (Nykaa)

Berger Paints: BRGR grew 9.8% growth YoY to INR30.3bn (broadly in-line HSIE: INR30bn). Decorative business grew 11.4% (~14% volume growth)

HDFC Securities

Consumer Discretionary: Beneath the averages lies the rub

Our discretionary universe is expected to grow by ~15% YoY in Q1FY24. However, beneath the averages lies the rub. Excluding 3 companies the average...

HDFC Securities

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