High valuation may limit gains in Nykaa's stock despite resilient Q1, robust outlook

FSN E-Commerce Ventures, popularly known for its Nykaa range of beauty, fashion and lifestyle products, posted revenue growth of 23 per cent year-on-year (Y-o-Y) for the April-June quarter (Q1), aided by 26 per cent growth in overall gross merchandise value (GMV).

- DEVANGSHU DATTA

The beauty and personal care (BPC) segment reported a 26 per cent growth in GMV and revenue rose 25 per cent.

Fashion segment reported a 25 per cent Y-o-Y growth in GMV and a lower 15 per cent revenue growth.

BPC's contribution and earnings before interest, taxes, depreciation and amortisation (Ebitda) margins expanded 73 basis points (bps) and 47 bps, respectively. Fashion's Ebitda margin increased 467 bps, as fixed costs were controlled.

The Q1FY26 revenue was at ₹2,150 crore. Ebitda was at ₹140 crore, up 46 per cent. Aggressive strategy led to high marketing costs at 15.2 per cent.

PAT was at ₹24.5 crore, up 72 per cent, and return on capital employed (ROCE) ratio was 12.7 per cent against 11.3 per cent. Q1FY26 revenue growth of 23 per cent was in line with estimates.

BPC segment's GMV increased 26 per cent, driven by a 17 per cent rise in orders and a 4.4 per cent increase in average order value (AOV).

The fashion segment's GMV growth was led by AOV growth of 6.3 per cent. BPC's revenue grew 24 per cent, slower than its GMV. Nykaa BPC firmly focused on adding more users (annual transacting user growth of 26 per cent at 16.5 million).