FSN E-Commerce Ventures Q4 FY26 earnings call

FSN E-Commerce reported robust financial results for Q4 and the full year FY26. Q4 Net Revenue grew 28% YoY to INR 2,648 crores, with GMV also increasing by 28% YoY. Profitability saw significant gains, with Q4 Gross Profit up 32% YoY to INR 1,203 crores (45.4% margin), EBITDA up 67% YoY to INR 223 crores (8.4% margin), and PAT soaring 313% YoY to INR 79 crores (3% margin). For the full year, Net Revenue crossed the INR 10,000 crore mark, with EBITDA at INR 752 crores (7.5% margin) and PAT at INR 204 crores (2% margin), demonstrating strong momentum.

The Beauty vertical maintained its strong growth trajectory, closing FY26 with a GMV of INR 15,000 crores, representing a 27% YoY growth, and an NSV of INR 8,500 crores. The segment's EBITDA margin stood at 9.6% for FY26, further improving to 10.3% in Q4 FY26. This performance was supported by improved marketing efficiencies, leading to 1.8 billion website and app visits and 45 million monthly active unique visitors. The platform successfully converted 19.7 million transacting customers, who placed 66 million orders in FY26.

The House of Nykaa segment emerged as a key growth driver, delivering INR 3,176 crores in GMV for FY26, a 50% YoY increase. Within this, the Beauty brands achieved an even higher 65% YoY GMV growth, reaching INR 2,788 crores. Key brands like Dot & Key demonstrated exceptional growth, expanding 13x over three years to INR 1,790 crores GMV, establishing itself as a leader in sunscreens and moisturizers. Kay Beauty also grew 3x over three years to INR 380 crores GMV, and Nykaa Cosmetics reached INR 400 crores GMV, highlighting the success of the owned brand strategy.

Nykaa Fashion achieved a significant turnaround, with FY26 GMV growing 30% to INR 5,000 crores and NSV also up 30% to INR 1,447 crores. The segment's EBITDA margin improved dramatically from -8.3% in FY25 to -2.6% for FY26, turning positive at 0.3% in Q4 FY26. This improvement was attributed to aggressive brand onboarding, with over 1,200 new brands added, a focus on acquiring high-quality premium customers, and strategic partnerships with marquee brands like H&M and Nike.

The company showcased strong capital efficiency, with fixed asset turnover improving to 9.9x and working capital days reducing to 28 days. Return on Capital Employed (ROCE) significantly improved to 21.2% from 11.3% a year ago. Nykaa continues to expand its physical retail footprint, now operating 313 stores across 99 cities, and is developing new experiential store formats. Strategic partnerships with global beauty giants like L'Oreal and Estée Lauder, and luxury brands such as Chanel, La Prairie, and SK-II, along with managing Nike.com operations, underscore its strong market position and operational capabilities.

Nykaa is increasingly leveraging AI to enhance marketing efficiencies and personalize the customer experience across its platforms. AI-powered skin scans and online derma recommendation engines are improving customer engagement and product discovery. This focus on AI is contributing to better customer acquisition costs and improved conversion rates, supporting both top-line growth and overall profitability. The company aims to use AI to drive more efficient spending on third-party platforms and personalize experiences for new customers.

Management expressed caution regarding global macroeconomic concerns, including high currency and oil prices, and inflation, which could potentially impact consumer demand and brand pricing in the coming year. However, they noted that beauty products are considered 'small luxuries' and tend to be less impacted during tougher economic times. Nykaa's diversified advertiser base and low revenue concentration from single brands also mitigate risks from potential ad spend pullbacks by FMCG companies, providing resilience against market fluctuations.