Nykaa vs. Mamaearth: Which Stock Shines for Long-Term Gains?

E-commerce stocks, which initially struggled in the stock market, have shown signs of recovery over the past year, with improved stock prices and earnings. With this rebound, investors wonder whether FSN E-Commerce Ventures (Nykaa) or Honasa Consumer (Mamaearth) offers a better long-term investment opportunity.

Stock Price Trend

Nykaa has performed almost 30% year-to-date in 2024, compared to a 16% increase for Honasa.

Despite this, both Nykaa and Honasa have posted positive returns in 5out of the 8months so far this year.

Nykaa’s stock rose by 21% in August, marking its 3rd consecutive month of gains, following a 9.4% increase in July and a 7.5% rise in June. Before this upward trend, Nykaa faced some challenges, with a 7% drop in May after a 9% increase in April and a 3.2% decline in March. Earlier in the year, Nykaa experienced a 3.9% fall in February and a 6% decrease in January.

In contrast, Honasa’s stock increased by 7% in August, following a 7.5% rise in July. Before this, it had a 2% loss in June after 2 months of gains, with a 2.4% increase in May and a 7.2% rise in April. The stock had some corrections in February and March, falling 11.5% in February and 2.8% in March. However, it rose over 6% in January.

Over the past year, Nykaa’s stock has climbed 67%, while Honasa has given 47%. The IPO was open from October 31, 2023, to November 2, 2023.

On August 21, 2024, Nykaa hit a year-high of ₹228.50 and had a 52-week low of ₹131.70 on August 28, 2023. On August 27, 2024, Nykaa is trading at ₹222.65 as of 10:37 AM on the NSE.

Honasa’s stock hit a record high of ₹510.75 on January 23, 2024. On August 27, 2024, Honasa’s stock traded at ₹499.05 as of 10:43 AM on the NSE.

Nykaa vs Mamaearth: A Look at Q1 FY25 Earnings

Nykaa (FSN E-Commerce Ventures)

For the quarter ending June 30, 2024, Nykaa reported a net profit of ₹13.6 crore, a substantial 152% increase from ₹5.4 crore in the same period last year. The company’s operating revenue was ₹1,746 crore, up 23% from ₹1,422 crore a year ago. Compared to the previous quarter (Q4 FY24), Nykaa’s profit after tax (PAT) grew by 50% from ₹9.07 crore, and its revenue increased by 4.6% from ₹1,668 crore. Nykaa’s gross merchandising value (GMV) for the April-June quarter was ₹3,321 crore, a 25% rise year-on-year. The company’s EBITDA grew by 31% year-on-year to ₹96 crore, with an EBITDA margin improvement of 5.5%.

Mamaearth (Honasa Consumer)

Honasa Consumer, which owns Mamaearth, also saw strong results for the quarter ending June 30, 2024. The company reported a net profit of ₹40 crore, a 63% increase from ₹24 crore a year earlier. Revenue from operations grew by 19% to ₹554 crore, up from ₹464 crore in the same quarter last year. Honasa’s product business grew by 20.3%, driven by a 25.2% increase in volume growth. The company’s EBITDA margin improved by 201 basis points year-on-year to 8.3%, resulting in an EBITDA of ₹46 crore. Mamaearth’s strong performance was due to better gross profit margins and increased efficiency through scaling.

Conclusion

Choosing the right stock for long-term investment can be challenging, especially in the rapidly changing digital economy. Nykaa and Mamaearth are two major players in the beauty and personal care sector that investors are considering. Nykaa’s well-established market presence, strategic partnerships, and robust financial performance make it a more reliable long-term investment option. In contrast, Honasa Consumer, which owns Mamaearth, focuses on natural and sustainable products and has demonstrated promising growth. However, its brand is newer and expected to see a moderate growth rate of 14% from FY24 to FY26.

While Mamaearth could offer higher short-term gains, Nykaa’s established track record and broader product portfolio make it a stronger candidate for long-term investment. Investors should weigh their risk tolerance and investment goals before making a decision.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.