JM Financial Institutional Securities has reiterated its ‘Buy’ recommendation on FSN E-Commerce Ventures, the parent company of beauty and fashion platform Nykaa, after the company reported its fourth quarter results for FY26. The brokerage also raised its 12-month target price marginally from Rs 325 to Rs 335, implying an upside of about 22% from the current market price of Rs 275.
The brokerage described Nykaa’s quarterly performance as a sustained execution story, with growth momentum holding up across both its Beauty and Personal Care (BPC), and Fashion segments.
What the numbers showed
Consolidated revenue grew 28% year-on-year to Rs 2,648.2 crore in the fourth quarter of FY26. Total GMV rose 27.8% year-on-year to Rs 5,241 crore, broadly in line with estimates.
The bigger positive, however, came on the margin front. Consolidated EBITDA margin expanded to 8.3% of net sales value, ahead of JM Financial’s own estimate of 7.5%, and up from 6.5% in the same quarter last year.
EBITDA rose 67% year-on-year to Rs 222.9 crore. Profit after tax, excluding minority interest, came in at Rs 78.4 crore against Rs 20.3 crore in the year-ago quarter.
BPC held up, margins surprised
The BPC segment, which remains the larger of the two businesses, reported GMV growth of 27% year-on-year. Net sales value for the segment grew 29% year-on-year to Rs 2,269 crore. Segment EBITDA margin improved 70 basis points year-on-year to 10.3% of NSV, well ahead of JM Financial’s estimate of 9.2%. The brokerage attributed the margin improvement primarily to AI-led efficiencies and lower fixed costs, even as the company continued to spend on customer acquisition and offline expansion.
Nykaa added 37 new stores during the quarter, including 11 Kiehl boutiques, taking its total store count to 313 across 99 cities. Annual unique transacting consumers in BPC rose to 19.7 million from 15.8 million a year earlier.
Fashion turns the corner
The fashion segment delivered what JM Financial called a structural recovery. GMV grew 29% year-on-year, while NSV grew 42% year-on-year to Rs 397 crore. More importantly, the segment reached EBITDA breakeven during the quarter, which the brokerage said was well within management’s own guidance. Contribution margin for the segment rose 870 basis points year-on-year to 12.1%, aided by gross margin improvement and a significant reduction in marketing costs as a percentage of NSV. Annual unique transacting consumers in fashion grew to 4.3 million from 3.2 million a year ago.
JM Financial said it views the fashion segment’s recovery as structural in nature and expects it to maintain growth momentum alongside EBITDA profitability going forward.
Estimate changes and valuation
While the brokerage made no major changes to revenue estimates, the margin beat prompted it to raise EBITDA estimates by 3-4% for FY27 and FY28, with EBITDA margin estimates moving up by 30-40 basis points. PAT estimates were revised upward by 2-4% over the same period. JM Financial now expects consolidated EBITDA to compound at around 50% annually over FY26 to FY29, on the back of BPC margins expanding beyond 13% from 9.6% in FY26, and Fashion margins reaching approximately 7% from a loss of 2.6% in FY26.
The revised target price of Rs 335 is based on a DCF valuation and implies approximately 53 times FY28 estimated EBITDA.
JM Financial said it expects Nykaa to sustain its growth momentum as higher BPC profits gradually get unburdened of losses in its eB2B business, and as fashion begins contributing to overall profitability in FY27 itself.