FSN E-Commerce Ventures Limited

Nykaa reported a robust Q2 FY26, achieving its highest GMV, EBITDA, and PAT margins since its IPO. GMV grew 30% YoY to INR 4,744 crores, while Net Revenue increased 25% YoY to INR 2,346 crores. EBITDA surged 53% YoY to INR 159 crores, resulting in a 6.8% margin, and PAT grew 154% YoY to INR 33 crores, with a 1.4% margin. Gross profit also saw a 28% YoY increase to INR 1,054 crores, representing a 44.9% margin, the highest in 12 quarters.

Both Beauty and Fashion verticals contributed to the overall growth, with Beauty GMV growing 28% YoY and Fashion GMV up 37% YoY to INR 1,180 crores. Beauty NSV reached INR 1,981 crores for the quarter, growing 27%. The Fashion vertical significantly improved its EBITDA from minus 9.0% a year ago to minus 3.5%, demonstrating strong progress towards profitability. The House of Nykaa brands achieved an annualized GMV run rate of INR 2,900 crores, growing 54% YoY.

Nykaa's cumulative customer base expanded to 49 million, a 32% YoY growth, driven by accelerated new customer acquisition across all categories including women, kids, men, and home, which are growing 70-80% YoY. The company continued its retail footprint expansion, opening 19 new stores in Q2, bringing the total to 265 stores across 90 cities. The physical retail space grew 37% YoY to 2.7 lakh sq.ft., with 2/3 of in-store GMV coming from premium brands.

Nykaa Now, the hyperlocal delivery service, now operates through 53 stores across seven cities, having processed 2 million orders to date. The service offers a wide assortment of beauty products, from mass to luxury, with delivery times ranging from 30 to 120 minutes, and a fastest recorded delivery of 7 minutes. This initiative aims to increase market share in personal care and provide quicker access to the beauty assortment.

Nykaa is strategically targeting Gen Z, who represent 26% of India's population and 50% of consumption, through initiatives like the Gen Z Campus Ambassador Programme, which generated over 7,000 pieces of content and 45 million reach. The Korean beauty portfolio, a key driver for skincare adoption among Gen Z, grew 60% YoY, with Nykaa offering the largest assortment of Korean brands in India.

The company secured significant international brand tie-ups, including exclusive launches for Prada Beauty, IT Cosmetics, La Prairie, and Maison Margiela. The recent partnership with H&M for online retailing of its full fashion and beauty portfolio is expected to drive cross-pollination across platforms. Nykaa is also seeing increased brand spend on advertising, creating more monetization opportunities through enhanced advertising tools, personalization, and self-serve dashboards.

Nykaa demonstrated improved operational efficiencies, with EBITDA margin expanding by 125 bps and gross margin by 111 bps. Capex for H1 FY26 was INR 58 crores, representing 1% of revenue, primarily invested in the beauty store network and tech capabilities. The company's working capital days are now close to 1 month, and ROCE has nearly doubled over the last three years to 14.1%, reflecting strong capital management.

The fragrance category is identified as one of the fastest-growing segments, with Gen Z showing strong adoption. Management plans to open dedicated fragrance-only stores, 'Nykaa Perfumery,' in key metros to capitalize on the physical retail experience required for fragrance testing. This strategic focus aims to make fragrance a more meaningful part of the overall revenue mix, aligning with global market trends where fragrance constitutes 15-25% of total beauty business.