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ICICI Securities Report
As noted in Q4 FY23, we believe consumption slowdown continued in Q1 FY24E, in most business-to-consumer 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. In our view, this trend was clearly visible in both ‘fashion' and ‘consumer foodservice'.
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While most apparel retailers were struggling to grow in Q1 FY24, Nykaa managed to grow its fashion revenues by 11% YoY. Similarly, Zomato Ltd.'s gross order value growth by 6.8% QoQ (9.2% YoY) in Q1 FY24E is likely to outpace most quick service restaurants on a like to like basis.
We think both these data points indicate possible market share gains for online versus offline. This is in contrast to the trend that was playing out over the last two-three quarters.
We think B2B e-commerce is likely to continue on a strong growth trajectory in Q1 FY24E led by penetration increase as small businesses explore means of increasing their digital footprint on both supply and demand sides.
Our channel checks reveal some price increases being taken in the segment. We think this validates our thesis of sustained segmental demand pull.
What to expect from Q1 FY24 results
Zomato:
We estimate Zomato's food delivery gross order value to grow 6.8% QoQ (9.2% YoY) in Q1 FY24E, broadly in line with management commentary during the Q4 FY23 earnings call. We think this was aided by increased participation from Zomato Gold members.
We estimate marginal improvement in food average order value (0.8% QoQ), as we think higher cart sizes should more than compensate for lower blended delivery charges (-2% QoQ).
We estimate food ordering contribution margin to expand by 50 bps QoQ led by restaurant take rate improvements.
FSN E-Commerce Ventures Ltd. (Nykaa)
In its earnings preview, management highlighted that the fashion segment was impacted due to the ongoing slowdown in apparel category.
The release mentions that fashion grew in low to mid-teens (our estimate:14.2% YoY). This, we think is higher than the growth rate for the apparel segment and could indicate share gains for online fashion.
Delhivery Ltd.
We estimate the Delhivery's express parcel shipment volumes to increase 19.6% YoY (but flattish QoQ) in Q1 FY24E given a seasonally weak quarter. We estimate steady improvement (5% QoQ) in partial-truck load volumes as Delhivery continues to improve its service level agreements.
IndiaMart Intermesh Ltd.
As micro, small and medium enterprises continue to shift to digital platforms, we think robust delivery by IndiaMart should continue.
We estimate Q1 FY24E revenue to grow 25.4% YoY (4.8% QoQ) led by 21.8% (YoY) growth in collections in Q1 FY24E.
Just Dial Ltd.
Given the continued outperformance of B2B e-commerce and management's conscious efforts to increase exposure in the space, we believe Just Dial's B2B revenue is likely to grow 12.9% QoQ (57.7% YoY) during Q1 FY24E.
Nazara Technologies Ltd.
We estimate revenue to grow 33.8% YoY (3.1%QoQ) in Q1 FY24E. In our view, this will be led by sustained strong growth in e-sports (40% YoY), gamified early learning (54% YoY) and ad-tech segments (34% YoY).
We estimate Ebitda margin to improve to 13.6% in Q1 FY24E versus 9.6% in Q4 FY23 and overall Ebitda to grow 35% YoY.
Matrimony.com Ltd.
We estimate Matrimony's matchmaking services to grow 7% QoQ in revenue terms in Q1 FY24E. We believe marriage services (~2.5% of revenues) should continue to grow faster at 11% QoQ.
We estimate overall revenue to grow 7.1% QoQ and 5.7% YoY.
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