Earnings Outlook
Beauty, fashion segments to boost FSN E-commerce numbers
This story was originally published at 18:21 IST on 7 February 2025
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By Steffy Maria Paul
MUMBAI – While demand during the festival and wedding season may have acted as a tailwind for FSN E-commerce Ventures Ltd., the overall slowdown in consumption is expected to have hurt the company in the December quarter. However, the growth in its beauty and personal care and fashion segments is expected to have driven the company in the quarter.
For the December quarter, the consolidated net profit of the company is seen more than doubling on year to INR 380 million, according to the average of estimates from six brokerages. The estimates for net profit range from INR 241 million by Nuvama Wealth Management Ltd. to INR 466 million by Elara Securities (India) Pvt. Ltd.
The company's consolidated net sales are expected to rise 28% to INR 22.96 billion for the latest quarter, the estimates showed. The lowest estimate for the top line was INR 22.60 billion by HDFC Securities Ltd., while the highest was INR 24.05 billion by Elara Securities. Sequentially, the net profit is seen growing almost four times, while net sales may rise 22%.
The company's consolidated revenue growth is expected to be higher than mid-twenties, FSN E-commerce had said in its quarterly update. The company expects its beauty vertical's revenue to grow higher than the mid-twenties and the segment's gross merchandise value to grow in the low thirties. Its fashion vertical is expected to deliver revenue growth of 20%, and the net sales value of the segment is expected to grow low to mid-teens.
Kotak Institutional Equities expects FSN E-commerce's gross merchandise value and revenue to grow 27% on year in the quarter driven by the beauty and fashion segments. The brokerage expects the beauty segment's gross merchandise value and revenue to grow 32% and 28%, respectively, during the quarter. It expects the fashion segment's gross merchandise value and revenue to grow by 1% and 21%, respectively. Nomura expects the fashion segment's gross merchandise value and revenue to grow 8% and 18% on year in the quarter.
Gross merchandise value of the fashion business is likely to have been impacted by the weakness in premium-wear demand. However, the beauty and personal care segment should post strong performance, driven by customer acquisition and festive period tailwinds, Kotak Equities said.
HDFC Securities expects the average order value in the beauty and personal care segment to be INR 2,100 in the December quarter. The brokerage expects the annual unique transacting customers in the beauty segment to grow around 45% on year and that in the fashion segment to grow 7%. The orders in the beauty segment are expected to grow 40.7% and those in the fashion segment are expected to grow 15.5% on year, the brokerage said.
The company is expected to report earnings before interest, tax, depreciation, and amortisation of INR 1.43 billion for the December quarter, according to the average of estimates from six brokerages. The EBITDA is expected to be in the range of INR 1.27 billion to INR 1.57 billion.
Kotak Equities expects the company's margins to expand 140 basis points on year to 6.9% on account of better operating leverage in the beauty segment and lower losses in the fashion segment. HDFC Securities expects the company to post an EBITDA margin of 6.2%.
Commentary on the fashion segment, working capital, and shift in the competitive landscape will be key monitorables, HDFC Securities said.
FSN E-commerce will detail its earnings for the December quarter on Monday. On Friday, shares of the company closed at INR 173.46 on the National Stock Exchange, down 0.2%. The stock has fallen 4% since it detailed its September quarter earnings. In the previous quarter, the company had reported a consolidated net profit of INR 100 million on revenues of INR 18.75 billion.
Of the seven brokerage reports on the company available with Informist, five have a 'buy' or equivalent rating on the stock, one has a 'hold' or equivalent rating, and one has a ‘sell' rating on the stock.
Following are the Oct-Dec earnings estimates for FSN E-commerce based on reports from six brokerage firms in the descending order by the estimate of net profit (in INR million):
Brokerage Firm | Net Sales | Net Profit | EBITDA |
Elara Securities (India) Pvt Ltd | 24,053.00 | 466.00 | 1,522.00 |
Kotak Institutional Equities | 22,781.00 | 429.00 | 1,569.00 |
HDFC Securities Ltd | 22,600.00 | 400.00 | 1,400.00 |
Nomura Equity Research | 22,784.00 | 372.00 | 1,346.00 |
JM Financial Institutional Securities Pvt Ltd | 22,796.00 | 371.00 | 1,470.00 |
Nuvama Wealth Management Ltd | 22,718.00 | 241.00 | 1,272.00 |
Average | 22,955.33 | 379.83 | 1,429.83 |
End
Edited by Ashish Shirke
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