NYKAA - FSN E-Commerce

📊 NSE: NYKAA 🏢 Trading 📅 Last Updated: 12/13/2025 22:10

💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, Nykaa's total revenue from operations grew 25% YoY to INR 2,346 Cr. The Beauty segment NSV grew 27% YoY to INR 1,981 Cr, while the Fashion segment NSV grew 27% YoY to INR 346 Cr. The Superstore (eB2B) business saw a 42% YoY growth in orders.

Geographic Revenue Split

While specific regional percentages are not disclosed, the company operates 165 retail stores across India and has expanded into the GCC (Gulf Cooperation Council) region to diversify its geographic footprint.

Profitability Margins

Gross margin reached a 12-quarter high of 44.9% in Q2 FY26, up 111 bps YoY. EBITDA margin improved 125 bps YoY to 6.8%, and PAT margin rose 71 bps YoY to 1.4%, both reaching their highest levels since the IPO.

EBITDA Margin

EBITDA margin was 6.8% in Q2 FY26, a 53% YoY increase in absolute EBITDA to INR 159 Cr. This was driven by a 82 bps reduction in employee expenses to 7.8% of revenue and a significant reduction in Fashion vertical losses from -9.0% to -3.5% EBITDA margin.

Capital Expenditure

Nykaa is executing capex plans to expand its physical footprint, currently operating 165 retail stores, with a focus on tech-enabled shopping formats to drive a 50% QoQ increase in merchandise salience through these stores.

Credit Rating & Borrowing

The company maintains a healthy financial profile with an interest coverage ratio of 3.77 times and a Net Cash Accrual to Total Debt (NCATD) ratio of 0.43 times as of fiscal 2023. CRISIL Ratings considers its subsidiaries strategic to operations.

⚙️ Operational Drivers

Raw Materials

Cost of Goods Sold (COGS) represents 55.1% of revenue (INR 1,292 Cr). While specific chemical inputs for private labels are not listed, the company focuses on diverse vendor onboarding to mitigate single-source dependency.

Import Sources

International brands are sourced globally (e.g., La Prairie from Switzerland), while domestic brands and private labels (House of Nykaa) are primarily sourced within India.

Key Suppliers

Not disclosed by name, but the company maintains relationships with numerous suppliers to mitigate vendor concentration risks and ensure a quick cash conversion cycle.

Capacity Expansion

Current retail footprint is 165 stores. The company is expanding its eB2B Superstore capacity, which added 1 lakh new retailers over the last year, representing a 41% growth in transacting retailers.

Raw Material Costs

COGS grew 23% YoY to INR 1,292 Cr in Q2 FY26, which was lower than the 25% revenue growth, allowing for a 111 bps improvement in gross margins to 44.9%.

Manufacturing Efficiency

Focus on high-margin owned brands (House of Nykaa) like Dot & Key, which crossed INR 1,500 Cr in GMV, and Nykd, which crossed INR 175 Cr GMV, to improve overall contribution margins to 19.6%.

Logistics & Distribution

Marketing and S&D expenses were 15.7% of revenue (INR 368 Cr), while fulfilment costs were 9.7% (INR 227 Cr). Total logistics and distribution-related costs represent approximately 25.4% of revenue.

📈 Strategic Growth

Expected Growth Rate

25%

Growth Strategy

Growth will be achieved through a dual focus on penetration (AUTC grew 27% to 17.5 Mn) and premiumization (exclusive tie-ups like La Prairie). Scaling the 'House of Nykaa' brands (Dot & Key, Nykd) and expanding the eB2B Superstore business (41% growth in retailers) are core pillars.

Products & Services

Beauty and personal care products, fashion apparel, lingerie (Nykd), skincare (Dot & Key), and eB2B distribution services for retailers via Superstore.

Brand Portfolio

Nykaa, Kay Beauty, Dot & Key, Nykd, Earth Rhythm, Superstore by Nykaa.

New Products/Services

Exclusive international brand launches (e.g., La Prairie) and doubling down on the Nykd lingerie brand, which is growing 30% YoY on Nykaa channels.

Market Expansion

Expansion into the GCC region and deepening penetration in India through 165 retail stores and the Superstore eB2B platform.

Market Share & Ranking

Nykaa is the second largest homegrown brands business in India and a leader in the specialized beauty e-commerce segment.

Strategic Alliances

Strategic integration with 51% owned subsidiaries like Dot & Key Wellness and Nykaa-KK Beauty Private Limited.

🌍 External Factors

Industry Trends

The industry is shifting toward premiumization and omni-channel retail. Nykaa is positioning itself with 165 stores and a 49 million cumulative customer base to capture the transition from unorganized to organized retail.

Competitive Landscape

Nykaa is outperforming industry growth with 25% revenue increases, competing against horizontal marketplaces and traditional retail through specialized curation.

Competitive Moat

Nykaa's moat is built on its curated brand assortment and a 49 million customer base. This is sustainable because the high cost of specialized beauty logistics (9.7% of revenue) and brand trust creates high entry barriers.

Macro Economic Sensitivity

Sensitive to inflation and GDP growth affecting discretionary spend; beauty consumption in India is currently at a low base, offering a multi-decadal growth tailwind.

Consumer Behavior

Shift toward trend-based shopping and premiumization, reflected in the 27% YoY growth in Annual Unique Transacting Customers (AUTC).

Geopolitical Risks

Potential disruption to international brand sourcing and global supply chains could impact the premiumization strategy.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with Companies Act 2013 and SEBI LODR regulations as confirmed by the FY25 secretarial audit report.

Environmental Compliance

The company has active Health, Safety, and Environment (HSE) and Corporate Social Responsibility (CSR) policies monitored by the Board.

Taxation Policy Impact

The effective tax rate for Q2 FY26 was approximately 41% based on a PBT of INR 56 Cr and a PAT of INR 33 Cr.

Legal Contingencies

The secretarial audit for the period ending March 31, 2025, reported no major events or legal actions having a major bearing on the company's affairs.