“As noted in Q4FY23 (January-March 2023), we believe (the) consumption slowdown continued in Q1FY24E (April-June 2023) in most business-to-consumer (B2C) consumption categories. We think this is due to sustained consumer inflation and its impact on disposable income as ‘return to office’ continues to be implemented across the country. However, online commerce seems to be faring better than offline,” the report, dated July 10, said.
Both Nykaa and Zomato are yet to report their June-quarter earnings.
On July 7, Nykaa had informed the stock exchanges that its fashion vertical is “expected to grow in the low to mid teens on YoY basis” in net sales value (NSV) terms for the June-quarter.
In retail, NSV is the sum of a company’s gross sales minus its returns, allowances and discounts. “This, we think, is higher than the growth rate for the apparel segment and could indicate share gains for online fashion,” said the brokerage firm.
ICICI Securities pointed out that most apparel retailers had been struggling to increase their revenues in the first quarter of FY24, while Nykaa is estimated to lift its fashion revenues by 11% year on year.
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Additionally the ICICI Securities report noted that Zomato is expected to outpace most quick-service restaurants (QSRs) “on a like to like basis”. The brokerage firm expects Zomato to record 9.2% year-on-year growth in its food-delivery gross order value (GOV), and 6.8% growth sequentially. Listed players in India’s QSR space include Jubilant Foodworks, which operates Domino’s Pizza and Dunkin Donuts outlets; Devyani International, which runs the franchisees of Yum Brands restaurants such as KFC, Pizza Hut, etc; and Restaurant Brands Asia Ltd, which operates Burger King’s franchisees.
“We think this (growth in Zomato’s food delivery GOV) was aided by increased participation from Zomato Gold members. We estimate marginal improvement in food AOV (average order value) of 0.8% QoQ, as we think higher cart sizes should more than compensate for lower blended delivery charges (-2% QoQ),” ICICI Securities said.
For the January-March quarter, Zomato had reported GOV of Rs 6,569 crore for its food delivery business — recording a sequential fall from the December quarter. For the April-June 2022 quarter, the company had recorded GOV for food delivery of Rs 6,425 crore. Zomato defines food-delivery GOV as the total monetary value of orders, including customer delivery charges, taxes, gross of all discounts, excluding tips.
“We think both these data points indicate possible market share gains for online vs offline. This is in contrast to the trend that was playing out over the last 2-3 quarters,” the report noted.
Overall ecommerce shipments are also expected to grow during the June quarter, ICICI Securities has estimated, as it anticipates 19.6% on-year growth in new-age logistics player Delhivery’s express parcel shipment volumes.
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