Which one is more grammatically correct?
In my opinion, "outwardly beauty" sounds better but I wanted to be sure it's grammatically correct.
If neither is correct, what is alternative? I considered "external appearance" but that doesn't sound as nice to me
Your first phrase is not quite correct.
Depending how you want to use it, you want either a noun or an adjectival phrase.
As a noun:
She has outward beauty.
As an adjectival phrase:
She is outwardly beautiful.
Since a complete sentence wasn't used in the question, it's not possible to tell which of those two would be appropriate in the context you're thinking of.
In this case "outward beauty" would be more correct, as "outward" is an adjective referring to "beauty", a noun, although consider "outer beauty", as it sounds more natural in my opinion.
