Nykaa Q1 Beauty Drives Growth While Fashion Shows Recovery
• Beauty segment GMV expected to grow around 26–27% year-on-year
• Fashion segment showing signs of recovery with 25% GMV growth
• Offline presence expanded to 110+ cities with 50 new stores added
Nykaa's vertical marketplace is likely to post robust quarter-on-quarter growth in its beauty as well as fashion business for the first quarter of fiscal 2025-26. This growth is driven by robust order volumes, consistent customer addition, and growing offline presence, said brokerages' analysis and company statements.
Both JM Financial Institutional Securities (JMFISL) and HDFC Securities anticipate mid-to-high twenties Gross Merchandise Value (GMV) growth for Nykaa's beauty and personal care (BPC) segment in the next quarter. JMFISL puts the BPC GMV up by approximately 26% YoY, driven by eB2B operations and Nykaa Man, whereas HDFC sees a 27% YoY increase, driven by a 28.6% rise in annual unique transacting customers and close to 30% growth in order volumes.
Steered by Falguni Nayar, Nykaa credits its growth in the beauty segment to broad gains in its online platform, offline physical stores, eB2B distribution, and the expanding "House of Nykaa" portfolio. This growth has been sustained even as there was a softer consumer reaction on the flagship Pink Day sale, on which the company partially faulted geopolitical tensions along the Indo-Pak border. Beauty is Nykaa's highest-value vertical, with repeat buys, private label margins, and early success in express delivery through Nykaa Now.
In apparel, HDFC expects approximately 25% GMV growth, fueled by a 19.4% YoY growth in unique transacting customers and a 26% increase in order sizes. JMFISL points to enhanced traction in the core platform, with the backing of an enhanced range and strong customer acquisition, resulting in a projected 14% YoY revenue growth. On a sustained basis, this momentum may also enable the fashion segment to reach breakeven by FY26, based on management estimates. Fashion net revenue growth is anticipated to be in the mid-teens, representing a sequential uptick although behind GMV growth.
Nykaa's parent entity, FSN E-Commerce Ventures Ltd., has estimated Q1FY26 consolidated net revenue growth of approximately 23-25% led by the beauty division as well as pre-recovery in fashion. Both brokerages believe profitability will improve, with JM Financial estimating an 80 basis points rise in EBITDA margin to 6.3% and HDFC predicting a 5.7% margin versus previous year. JMFISL expects overall contribution profit to grow around 23% YoY, even though the core BPC contribution margin declined marginally.
The firm significantly ramped up its offline reach in FY25 by opening more than 50 new stores and now has a presence in over 110 cities. In the future, the management's view of the revival in fashion, working capital management, profitability of eB2B, competitive landscape, and progress on supply chain investments and global growth plans will be tracked closely by the analysts.
