Shares of Indian cosmetics-to-fashion platform Nykaa fell as much as 7.4% on Monday after reporting a 96% slump in quarterly net profit, hurt by higher marketing and advertisement expenses.
FSN E-Commerce Ventures Ltd, popularly known by the brand name Nykaa, last week debuted at a 79.4% premium to its offer price and closed at 2,205 rupees on Nov. 10.
Analysts said last week at the time of the stock debut that Nykaa’s valuations look expensive despite factoring in strong long-term growth prospects.
Nykaa’s shares fell as much as 7.4% to 2,185 rupees on Monday, before paring some losses to trade 5% lower at 2,242.60 rupees.
In its first earnings report following a blockbuster market debut, Nykaa late on Sunday reported a consolidated net profit of 11.7 million rupees ($157,306.69)
for the September quarter, compared with 274.7 million rupees a year earlier.
The company’s marketing and advertisement expenses rose nearly four times to 1.21 billion rupees for the quarter.
“We have maintained growth momentum in our beauty business, accelerated our fashion business and focused on building the brand Nykaa with strong marketing campaigns,” Chief Executive Officer Falguni Nayar said in a statement.
Founded by Nayar, a former investment banker, in 2012, Nykaa’s quarterly revenue from operations rose 46.6% to 8.85 billion rupees.
The company, which sells cosmetics, clothes, accessories and home supplies, said it added eight new physical retail stores during the quarter and its total physical store count was 84 as of Sept. 30.
Gross merchandise value (GMV) at Nykaa’s beauty and personal care segment was up 38%, while GMV from its fashion vertical more than tripled during the quarter.
($1 = 74.3770 Indian rupees)