### Nykaa Q2 FY26 Overview
FSN E-Commerce Ventures Ltd. (Nykaa), India's leading beauty and fashion e-tailer, reported robust Q2 FY26 (July-September 2025) results on November 7, 2025, driven by strong festive demand, premiumization in beauty, and operational efficiencies. The company achieved consolidated profitability with significant YoY growth, though PAT slightly missed analyst estimates (expected ~₹40-45 crore). Consolidated GMV surged 30% YoY to ₹4,744 crore, reflecting accelerated momentum in its omnichannel model (1,300+ stores, strong online presence). Nykaa's beauty segment, contributing ~91% of revenue, continues to dominate the organized market (valued at ₹1.2 lakh crore, growing 15-20% CAGR), while fashion shows signs of recovery amid inventory optimization.
Management highlighted "accelerated growth" from expanded assortments (50,000+ SKUs), loyalty programs (Nykaa PRO with 10M+ members), and cost controls, including lower ad spends and supply chain tweaks. EBITDA margins expanded 130 bps YoY to 6.8%, aided by scale and premium product mix (luxury beauty up 40%). However, fashion losses narrowed but persist due to competitive pressures. H1 FY26 revenue grew 24% to ₹4,501 crore, with PAT at ₹57 crore (up ~107% YoY).
### Key Financial Highlights
| Metric | Q2 FY26 | YoY Growth | QoQ Growth | Notes |
|-------------------------|---------|------------|------------|-------|
| **Cons. Revenue from Operations** | ₹2,346 crore | +25% (from ₹1,875 crore) | +8% | Driven by beauty (91% share); total income ₹2,354 crore. |
| **Cons. EBITDA** | ₹159 crore | +53% | +15% | Margin: 6.8% (up 130 bps YoY); better leverage on fixed costs. |
| **Cons. PAT** | ₹34 crore | +243% (from ₹10 crore) | +150% | Includes exceptional items (arbitration gain ₹9 crore, offset by inventory provision ₹10 crore); misses est. of ₹40 crore. |
| **Cons. EPS** | ₹0.14 | +233% | N/A | Basic EPS; reflects profitability turnaround. |
| **Standalone Revenue** | ₹77 crore | -30% | N/A | Lower due to inter-segment eliminations; PAT ₹12 crore (-24% YoY). |
### Segment-Wise Performance
- **Beauty (Including Luxe & Wellness)**: Revenue ₹2,132 crore (+28% YoY), GMV +35%, EBITDA ₹105 crore (margin ~5%). Premium/luxury drove 40% growth; new launches (e.g., 200+ international brands) and offline expansion (200+ stores added) key.
- **Fashion**: Revenue ₹201 crore (+8% YoY), but still loss-making (EBITDA loss ₹21 crore, narrowed 20% YoY). GMV +15%; focus on private labels and quick commerce tie-ups to improve.
- **Others (H&M, etc.)**: Marginal ₹13 crore revenue.
Expenses rose 23% YoY to ₹2,189 crore, with employee costs up 20% (headcount +15% to 15,000) and marketing flat at 8% of revenue. Net debt stands at ₹50 crore (down 60% YoY), with ROCE at 12% (up from 8%).
### What Analysts Are Saying
Analysts applaud the growth beat on revenue/GMV but note PAT miss due to one-offs and fashion drag; long-term optimism persists on beauty dominance and 20-25% revenue CAGR target for FY26. Consensus rating: Hold (10 Holds, 3 Buys, 3 Sells); avg. PT ₹240-260 (8-15% upside from ~₹220 close). Post-results, some revisions downward on EPS but upward on revenue outlook.
| Analyst/Firm | Key Views on Results | Valuation & Risks | Recommendation & PT |
|-----------------------|---------------------------------------|---------------------------------------|---------------------|
| **Kotak Institutional Equities** | Revenue/GMV beat est. (24% projected); margins resilient despite festive costs. Fashion recovery slower than hoped. | Trades at 4x FY26 EV/Sales (fair); risks from competition (Purplle, Myntra). | Accumulate; PT ₹250 (15% upside). |
| **Emkay Global** | Strong beauty execution; EBITDA margin expansion positive. PAT miss from exceptional items—core profit +145% YoY. | 3.5x EV/Sales; premium to peers but justified by 30% GMV growth. | Buy; PT ₹260 (18% upside). |
| **ICICI Securities** | Festive boost evident; loyalty programs aiding retention (AOV +12%). Overall beat on top-line. | Valuation stretched post-rally; monitor fashion losses. | Hold; PT ₹235 (7% upside). |
| **Nuvama (Edelweiss)** | GMV acceleration to 30% signals momentum; beauty premiumization key driver. | 4.2x FY26 Sales; EPS est. cut to ₹0.79 (from ₹0.82). | Buy; PT ₹235. |
| **Consensus (TipRanks/Yahoo)** | Mixed: Top-line strong, bottom-line volatile. 16 analysts: Avg. EPS FY26 ₹0.79 (down slightly post-results). | Avg. PT ₹245 (11% upside); risks: Macro slowdown, inventory issues. | Hold overall. |
Outlook: Nykaa targets 25%+ revenue growth for FY26, with beauty margins to 8-9% via supply chain efficiencies and international expansion (UAE, Singapore). Investors should watch Q3 festive spillovers and fashion turnaround; stock volatile post-results (down 1-2% intraday). For full details, refer to the earnings call transcript expected later today.
FSN E-Commerce Ventures which operates Nykaa brand, reported a 243% YoY jump in its consolidated Q2 net profit at Rs 34 crore versus Rs 10 crore in the year ago period. The profit after tax (PAT) is attributable to the equity shareholders of parent.
The revenue form operations in the quarter stood at Rs 2,346 crore, up 25% over Rs 1,875 crore in the corresponding quarter of the last financial year.
The net profit grew 48% on a sequential basis compared to Rs 23 crore in Q1FY26 while the topline increased 9% on a quarter-on-quarter basis to Rs 2,155 crore.
Nykaa's gross profits stood at Rs 1,054 crore which were 50% of its net revenues while rising by 28% on a YoY basis. The company claimed that the gross margin n the quarter was the highest in the last 12 quarters.
The Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) stood at Rs 159 crore in the reporting quarter, up 53% on a YoY basis. This is its highest EBITDA since the IPO.
The company added 19 stores in the quarter gone by, penetrating 8 new cities. The company expanding retail area, with newer formats with over 2.7 lakh square feet of retail space at the end of September quarter. This is a 37% YoY growth.
Nykaa's Marketing and S&D expenses grew by 29% to Rs 368 crore versus Rs 286 crore in the year ago period.
EBITDA margin was reported at 6.8%, up 125 bps over 5.5% in the year ago period meanwhile PAT margin stood at 1.4% versus 0.7% in Q2FY25, rising by 71 bps.
No comments:
Post a Comment