The share price of FSN E-Commerce Ventures, which operates Nykaa, after hitting nearly 7% intra-day today, closed in green up over 5%. This is after the beauty commerce platform posted a 25 per cent year-on-year jump in revenue in Q2FY26. Profit after tax more than doubled to Rs 33 crore. However, the results drew mixed reactions from brokerages. JM Financial and Nuvama remained bullish, both retaining their Buy ratings on the stock. Nomura, however, kept a Neutral stance, saying current valuations already reflect most of the upside.
Nomura on Nykaa: Valuation limits upside
Nomura called Nykaa’s performance steady and broadly in line with expectations. Revenue of Rs 2,345 crore matched its forecast, while margins improved to 6.8 per cent from 6 per cent a year earlier.
The brokerage noted that BPC margins held firm at 8.3 per cent, and fashion losses narrowed sharply with a 500-basis-point improvement quarter-on-quarter. Nomura expects the recovery in fashion to continue as new brands and store expansion strengthen the business.
It has raised its revenue forecasts by up to 7 per cent for FY26 – FY28 and lifted its target price to Rs 262 from Rs 223. This implies an upside of about 6.5 per cent from the current levels. However, it retained a Neutral rating, saying Nykaa’s valuation at 4.4 times estimated FY27 enterprise value to sales already looks fair.
Nomura flagged risks from slower e-commerce adoption, execution issues in fashion, and possible restrictions on private labels.
JM Financial on Nykaa: Fashion driving the comeback
JM Financial described the quarter as one of Nykaa’s best in recent years, led by strong growth in fashion. GMV for the segment rose 37 per cent from a year earlier and 22 per cent sequentially, marking the fastest expansion in nearly two years.
The segment’s EBITDA margin improved by 550 basis points year-on-year, reducing quarterly losses to about Rs 120 crore. JM said a breakeven could be achieved as early as the December quarter.
The BPC business continued its steady run with 28 per cent GMV growth and the addition of one million new customers. Offline expansion gathered pace as Nykaa added 19 new beauty stores during the quarter, taking its total presence to 265 across 90 cities.
Nykaa’s B2B platform, SuperStore, saw slower growth in the quarter as a GST rate change on around 40 per cent of its products prompted retailers to postpone purchases. GMV grew 25 per cent year-on-year, contributing roughly 8 per cent to overall BPC GMV.
JM Financial said the GST effect was temporary and that the business should normalise in the next few quarters. Nuvama reported that transacting retailers grew 41 per cent to 3.32 lakh and forecasted contribution profitability by FY28.
Nuvama on Nykaa: Fashion biz to break even in FY26
Nuvama Institutional Equities described the September results as better than expected, pointing to robust growth in both BPC and fashion. The two segments reported 27 per cent year-on-year growth in net sales value, helping consolidated revenue rise 25 per cent.
EBITDA margin expanded 130 basis points to 6.8 per cent, driven mainly by fashion’s turnaround. The segment’s contribution margin improved 100 basis points, while EBITDA margin rose nearly nine percentage points to -6 per cent. Nuvama said management expects fashion to achieve breakeven during FY26.
BPC continued to perform well, with contribution margin improving 30 basis points to 20.5 per cent and EBITDA margin rising to 8.3 per cent. Annual transacting customers in BPC grew 27 per cent to 1.75 crore, and in fashion by 23 per cent to 37 lakh. Average order values rose modestly in both segments.
The brokerage raised its target price to Rs 285 from Rs 235 and maintained a Buy call, expecting further gains as losses narrow in fashion and eB2B operations. The 12-month target implies an upside of about 16 per cent from the current level.
Brokerage views on Nykaa’s core strength
All three brokerages agreed that the beauty and personal care division continues to anchor the company’s growth. The segment recorded consistent gains in customer count, order volumes and average ticket size.JM and Nuvama warned that higher marketing spending could temper near-term earnings
JM Financial pointed out that gross margin in core BPC improved by 110 basis points year-on-year, helped by a greater share of owned brands. Nomura said festive demand and store additions supported the rise in unique transacting customers. Nuvama added that faster fulfilment and network integration allowed 70 per cent of top-city orders to be delivered on the same or next day.
Nomura expects revenue to climb to Rs 10,149 crore in FY26 and Rs 12,955 crore in FY27. JM Financial estimates Rs 10,057 crore and Rs 12,865 crore, while Nuvama forecasts Rs 10,006 crore and Rs 12,635 crore for the same period.
Nomura stayed cautious, saying the stock is fully valued for now. JM Financial and Nuvama see room for further upside as margins improve and owned brands expand their share.