FSN E-Commerce Ventures Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

FSN E-Commerce delivered a strong Q3 FY26, reporting 28% YoY GMV growth to INR 5,795 crores and a record 8.0% EBITDA margin, up 180 bps YoY. The Beauty segment continued its robust performance with 27% GMV growth and 10.1% EBITDA margin, while the Fashion segment significantly improved its EBITDA margin from -5.4% to -2.0%. Key strategic partnerships with Nike, L'Oreal, and H&M, alongside strong growth in owned brands like Dot & Key and Kay Beauty, underpinned the quarter's success.

Highlights

  • Consolidated GMV grew 28% year-on-year to INR 5,795 crores.

  • Consolidated Net Revenue increased 27% year-on-year to INR 2,873 crores.

  • EBITDA margin reached a record 8.0% of net revenue (INR 230 crores), marking a 180 bps improvement and 63% YoY growth.

  • PAT grew 156% YoY to INR 68 crores (2.4% of net revenue), or INR 78 crores (2.7%) adjusted for a one-time labor code impact.

  • House of Nykaa Brands achieved an annualized GMV of INR 3,500 crores, growing 48% YoY, with Dot & Key growing over 100% and Kay Beauty over 60%.

  • Fashion business EBITDA margin significantly improved from minus 5.4% a year ago to minus 2.0% this quarter (340 bps improvement).

  • Strategic partnerships with Nike (D2C operations), L'Oreal (exclusive distribution for La Roche-Posay, NYX Makeup, and Kiehl's operations), and H&M were highlighted.

Concerns

  • Fashion NSV growth of 25% YoY was lower than GMV growth of 31% YoY for the quarter, and similarly for the 9-month period (24% NSV vs 31% GMV).

  • Management was evasive on specific financial details and revenue streams for the Nike partnership, stating only that unit economics are 'very similar to e-commerce revenues and margins'.

  • While BPC margins are improving, management noted that 'mix impact sometimes pulls something down' (Falguni Nayar, Page 19), indicating potential volatility in margin drivers.

Key financials

  1. GMV ₹5,795 Cr +28%YoY
  2. Net Revenue ₹2,873 Cr +27%YoY
  3. Gross Profit ₹1,297 Cr +31%YoY
  4. EBITDA ₹230 Cr +63%YoY
  5. EBITDA Margin 8%
  6. PAT ₹68 Cr +156%YoY
  7. Working Capital Days 30 days
  8. ROCE 19.1%

What they filed

Q1 FY27: revenue up 29.1%, net profit up 233.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,875 2,267 2,062 2,155 2,346 +25%2,873 +27%2,648 +28%2,782 +29%
EBITDA104 141 133 141 159 +53%230 +63%223 +68%236 +67%
Net profit13 26 19 24 33 +154%68 +162%79 +316%80 +233%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Beauty (Consolidated)
    ₹4,302 Cr GMV29% NSV Growth10.1% EBITDA Margin (Q3)9.4% EBITDA Margin (9M)134 bps EBITDA Expansion
  • Fashion (Consolidated)
    ₹1,500 Cr GMV25% NSV Growth-2% EBITDA Margin (Q3)-5.4% EBITDA Margin (Q3 Last Year)340 bps EBITDA Improvement-3.7 % of net revenue Losses (9M)
  • House of Nykaa Brands (Consolidated)
    ₹3,500 Cr Annualized GMV₹3,100 Cr Beauty Annualized GMV₹400 Cr Fashion Annualized GMV₹775 Cr Beauty GMV (Q3)₹1,900 Cr Dot & Key Annualized GMV₹500 Cr Kay Beauty Annualized GMV₹500 Cr Nykaa Cosmetics Annualized GMV₹150 Cr Nykd Annualized GMV
  • Nykaa Distribution (eB2B)
    31% NSV Growth23% GMV Growth40% Transacting Retailers Growth574 bps EBITDA Margin Improvement

Guidance & targets

Profitability

  • Beauty Consolidated EBITDA Margin Profitability · going forward · Medium confidence continuing to improve
    I think we feel that there is a scope for continuing to improve EBITDA margins for the beauty consolidated like beauty vertical business because all the 4 businesses are going to gain from increase in scale and marketing costs, S&D costs, not so much, but definitely marketing costs as well as other expenses also will get a leverage of scale.

    — Falguni Nayar

What to watch in Q4 FY26

Consolidated Beauty EBITDA Margin

Next quarter
Current 10.1% (Q3 FY26)
Target Continued improvement

Why it matters

Management expressed confidence in further structural improvement driven by scale across all four beauty sub-segments.

I think we feel that there is a scope for continuing to improve EBITDA margins for the beauty consolidated like beauty vertical business because all the 4 businesses are going to gain from increase in scale and marketing costs, S&D costs, not so much, but definitely marketing costs as well as other expenses also will get a leverage of scale.

Risks & concerns

  • Market landscape changes and AI impact on discovery/conversion

    medium

    The whole landscape is changing, making it difficult to guide, but the company remains prepared and hungry to grow.

    Management acknowledged

  • Mix impact on gross margin

    low

    Mix impact sometimes pulls gross margin down and also affects service ad income.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
AOV vs Customer Acquisition in Beauty Direct
we've always said that new customer AOVs tend to be lower than repeat customer AOV. And that doesn't really have to do with the quality of the customer. That's just how the customer, the more they engage with the platform, the more comfort they get shopping on the platform.

Addresses concerns about potential AOV dilution from aggressive customer acquisition, with management confirming no major AOV drop for new customers and a strategy to grow customer value over time.

Asked by Sachin Dixit

BPC Margin Improvement Sustainability Direct
the gross profit margin improvement is really an outcome of generally improvements across all four of those businesses that is ultimately resulting in a consolidated improvement.

Clarifies that margin expansion is broad-based across all beauty verticals (beauty.com, retail, owned brands, B2B) and not solely due to seasonal ad income, suggesting structural improvements.

Asked by Sachin Dixit

Nykaa Now Scale and Profitability Direct
in cities and in pin codes where it is now live, the majority of the order, I mean, a large percent of the orders is now being fulfilled by Nykaa Now... it's not very different at this point in time [profitability of margin per order].

Provides insight into the rapid adoption and operational efficiency of Nykaa Now, indicating it's already handling a significant portion of orders in its operational areas without diluting profitability.

Asked by Nikhil Choudhary

House of Nykaa Brands Growth Drivers Direct
there are definitely some new third-party channels that were added in the last year. So it's more a reflection of just new channels being opened up rather than a slowdown in a particular channel versus not.

Explains that the strong growth in third-party channels for House of Nykaa Brands is due to new channel additions rather than a shift away from the core Nykaa platform, indicating diversified growth.

Asked by Nikhil Choudhary

Nike Partnership Revenue Model and Profitability Evasive
from a unit economic perspective for Nykaa boil down to very similar to e-commerce revenues and margins... I would not want to go into the commercial construct of the arrangement.

While management confirmed the partnership's unit economics are similar to e-commerce, they refrained from providing specific financial details, leaving investors to infer the exact impact.

Asked by Kapil Singh

Impact of Free Trade Agreements (India-UK/EU) on Imports Direct
if the tariffs are lower, they could even pass some of that advantage on to the consumer in terms of bringing the price multiplier down and making the products more... equitable on price to what it is in the U.S. and European markets.

Highlights a potential future tailwind for Nykaa's import business, suggesting lower tariffs could lead to increased affordability and volumes for international beauty brands.

Asked by Vijit Jain

Perfumery Business AOV and Scale Direct
this Nykaa Perfumery store, the average order value is 3x that of our regular retail stores for a couple of reasons. One is, yes, generally, fragrances are a higher ASP product... But also secondly, because this is a slightly more luxury retail concept.

Confirms the high AOV of the new Perfumery stores and explains the drivers (higher ASP products, luxury positioning), indicating a successful niche strategy.

Asked by Vijit Jain

Structural Improvement in BPC EBITDA Margins Direct
I think we feel that there is a scope for continuing to improve EBITDA margins for the beauty consolidated like beauty vertical business because all the 4 businesses are going to gain from increase in scale and marketing costs, S&D costs, not so much, but definitely marketing costs as well as other expenses also will get a leverage of scale.

Management expresses confidence in continued EBITDA margin improvement for the overall beauty business, driven by scale efficiencies across all four sub-segments.

Asked by Nihal Mahesh Jham

4 min read 7 chapters

Detailed narrative

Q3 FY26 Consolidated Performance Overview

FSN E-Commerce reported a strong Q3 FY26 with consolidated GMV growing 28% year-on-year to INR 5,795 crores and Net Revenue increasing 27% year-on-year to INR 2,873 crores. Gross Profit reached INR 1,297 crores, representing 45.2% of net revenue and a 31% YoY growth. The company achieved its highest-ever EBITDA margin of 8.0% of net revenue, translating to INR 230 crores, a 63% YoY increase. PAT stood at INR 68 crores (2.4% of net revenue), growing 156% YoY, and would have been INR 78 crores (2.7%) after adjusting for a one-time labor code impact. The company also demonstrated improved efficiency with working capital days at 30 days for 9 months FY26, a 4-day improvement YoY, and ROCE at 19.1% annualized for 9 months, up from 11.3% in FY25.

Beauty Business: Robust Growth & Margin Expansion

The Beauty vertical delivered a GMV of INR 4,302 crores, growing 27% year-on-year, and an NSV growth of 29%, accelerating from 26% a year prior. The EBITDA margin for the Beauty business reached 10.1% of net revenue for the quarter and 9.4% for the nine months. This 134 basis points expansion in Beauty EBITDA was driven by strong omnichannel performance, improved unit economics in eB2B, and outperformance of House of Nykaa Brands. The company also reported 18.7 million annual unique transacting customers, a 26% YoY increase, and highlighted its content-to-commerce strategy, with 76% of Gen Z content consumption being creator-driven.

Fashion Business: Significant Profitability Turnaround

The Fashion business recorded a GMV of INR 1,500 crores, growing 31% year-on-year, with NSV growth at 25%. Notably, the Fashion segment's EBITDA margin improved significantly from minus 5.4% a year ago to minus 2.0% this quarter, a 340 basis points improvement. This turnaround was attributed to robust customer acquisition, which was up 45% YoY, strong festive sales, and marquee brand wins like H&M, which became the number one brand on Nykaa Fashion since its launch. The company continues to expand its assortment across men's, kids', accessories, and home categories.

House of Nykaa Brands: Accelerated Growth & Diversification

The House of Nykaa Brands achieved an annualized GMV run rate of INR 3,500 crores, marking a 48% year-on-year growth. This includes INR 3,100 crores from beauty and INR 400 crores from fashion. Key brands like Dot & Key grew over 100% to an annualized GMV of INR 1,900 crores with high-teens EBITDA margins, while Kay Beauty crossed INR 500 crores annualized GMV with over 60% growth. Nykaa Cosmetics is approaching INR 500 crores annualized GMV, and Nykd, a fashion owned brand, reached INR 150 crores annualized GMV. The growth is diversified across Nykaa Online, Nykaa Stores, Nykaa Distribution, and other third-party channels.

Strategic Partnerships & Distribution Reach

Nykaa announced a deep strategic partnership with Nike to run its official D2C digital commerce platforms in India (Nike.in and Nike Commerce Apps), managing end-to-end operations. The company also strengthened its relationship with L'Oreal, securing exclusive distribution rights for La Roche-Posay and NYX Makeup, and taking over Kiehl's operations in India. Additionally, Nykaa Distribution (eB2B) expanded its reach to 485,000 retailers throughout the country across 1,100 cities, growing NSV by 31% and adding 1 lakh transacting retailers in the last year, including for its own brands.

Physical Retail Expansion & New Experiential Formats

Nykaa expanded its physical footprint by opening 11 new stores in Q3, bringing the total count to 276 stores across 94 cities, covering 2.8 lakh square feet of retail space. The company introduced new experiential formats, including Nykaa Perfumery stores, which have 3x higher average order values than multi-brand specialty stores, with over 45% of business from men's fragrances. Other formats like Nykaa Luxe, Nykaa On Trend, Nykaa Kiosks, and Kay Kafe (blending beauty with coffee) aim to drive fragrance adoption, engage younger audiences, and bring more customers into the beauty funnel.

Nykaa Now: Quick Commerce & Hyperlocal Delivery

Nykaa Now, the company's quick commerce platform, has stabilized and picked up demand, now live in all seven Tier 1 cities with a delivery promise of 30 minutes to 2 hours. All retail stores are enabled with hyperlocal delivery capabilities. Management indicated that a significant percentage of orders in live cities are fulfilled by Nykaa Now, and while average order values might be lower, the increased purchase frequency is expected to offset any potential dilution, making it non-dilutive to overall profitability in a meaningful way.

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