Nykaa Buys Majority Stake in Green & Clean Beauty Startup Earth Rhythm, Will Help to Expand

Nykaa, the cosmetics ecommerce behemoth, recently announced that it has acquired a controlling stake in the clean beauty business Earth Rhythm.

Founded in 2019 by Harini Sivakumar, Sivakumar Varadarajan, and Arun Kumar, Gurugram-based Earth Rhythm is noted for its vegan, cruelty-free, and biodegradable personal care products, which include skincare, hair care, makeup, and lip care.

In 2022, the corporation bought a minority position in Earth Rhythm via a combination of primary and secondary deals.

“Earth Rhythm is an exciting addition to our owned brands portfolio, and it presents an opportunity to expand our play in the clean beauty space, a category with enormous long-term potential,” said Adwaita Nayar, co-founder of Nykaa and CEO of Nykaa Fashion and Beauty Brands.

Related: Skincare startup Sereko expands retail presence through Tata 1mg & Broadway

However, Nykaa’s fashion vertical continues to fall behind. The NSV for the fashion segment increased in the low teens. Its overall sales growth reached a low 20%, which the business attributed to the acquisition of its content platform Little Black Book (LBB).

It is worth noting that Nykaa chose to integrate LBB with Nykaa Fashion earlier this year.

The company reported a modest dip in consumption in the first half of FY25, but it is optimistic that demand would return in the second half, boosted by the festive and wedding seasons.

Nykaa’s fashion vertical has been a laggard in recent quarters, with increased competition. In Q1 FY25, the GMV of the fashion industry increased barely 15% year on year (YoY) to INR 774.1 crore.

The startup has $9.13 million in capital from investors, including Anicut Capital.

Nykaa intends to use Earth Rhythm’s powerful ecosystem to accelerate expansion. This involves prioritizing innovation, improving marketing methods, and expanding omnichannel distribution while maintaining the brand’s core values and unique proposition.

Overall, the company’s consolidated net profit increased by about 152% to INR 13.6 Cr in the first quarter of FY25, from INR 5.4 Cr a year earlier. Operating revenue increased by 22.8% to INR 1,746.1 crore in the reporting quarter, from INR 1,421.8 crore in Q1 FY24.

Nykaa is trying to increase its revenue by expanding into the Middle East. As part of this strategy, it has established two new subsidiaries in Qatar and Saudi Arabia under the Nysaa brand name.

Nykaa shares closed Monday’s (October 7) trading session 0.9% higher at INR 193.95 on the BSE, amid a slaughter in new-age technology equities.

Nykaa intends to use its robust ecosystem to accelerate Earth Rhythm’s growth. This includes prioritizing innovation, improving marketing methods, and extending omnichannel distribution while maintaining the brand’s core values and unique proposition.

“Nykaa provides a broad and strong distribution infrastructure that brands may exploit to expand successfully. “Nykaa’s 360-degree marketing across social media, influencer networks, and content enables brands to thrive in a competitive market,” stated Harini Sivakumar, founder and CEO of Earth Rhythm.