Nykaa Stock Gains on Strong Q1 Earnings; Fashion Losses Narrow, BPC Shines
Nykaa shares climb after strong Q1 earnings; profit up 79%, revenue up 23%, but brokerages differ on long-term outlook.
Nykaa Earnings Beat: Q1 Profit Jumps to ₹24 Crore, Stock Rallies 4%
Shares of FSN E-Commerce Ventures Ltd (Nykaa) rose nearly 4% on Tuesday after the beauty and fashion retailer reported a 79% year-on-year surge in consolidated net profit for Q1.
📊 Strong Q1 performance
Nykaa posted a net profit of ₹24 crore for the quarter ended June, up from ₹14 crore a year earlier. Revenue from operations climbed 23% to ₹2,155 crore versus ₹1,746 crore in Q1FY25. EBITDA margin expanded 100 basis points YoY to 6.5%, supported by improved gross margins and operating leverage.
♦ Beauty and Personal Care (BPC): Contribution margin rose 70 bps to 21%, while EBITDA margin improved 50 bps to 8.4%.
♦ Fashion segment: Contribution margin slipped 280 bps to 14%, but EBITDA margin improved sharply by 470 bps to -10.5%.
Management reaffirmed its FY26 target to break even at the EBITDA level in Fashion, while BPC continues to post robust growth and profitability.
Stock movement and analyst reactions
At 9:20 am, Nykaa’s shares were trading at ₹212 on NSE, up 3.7%.
♦ Nuvama Institutional Equities: Retained Buy with ₹235 target, citing strong BPC performance and easing competitive pressures.
♦ Nomura: Maintained Neutral, revising target to ₹223 (from ₹216), highlighting growth momentum but margin softness. Annual unique customers grew 26% YoY, while average order value rose 4%, reflecting premiumisation trends.
♦ HDFC Securities: Maintained Reduce with ₹180 target, flagging elevated valuations despite operational improvement.
Outlook
Nykaa’s core BPC business continues to deliver steady growth and profitability, while Fashion losses narrow, aligning with management’s breakeven guidance. However, mixed demand signals and high valuations keep analyst sentiment divided.
