Mumbai: Shares of FSN E-Commerce Ventures Ltd, the parent company of Indian beauty and fashion retailer Nykaa, surged 10.60% this week, marking their biggest weekly gain in 14 months, as investor optimism grew over a strong September-quarter performance and a visible turnaround in its fashion vertical.
Stock at 14-month high on Q2 optimism
The rally, driven by robust business updates and sustained investor confidence, has lifted Nykaa’s stock by 14.12% so far in October. The stock has closed the past six months in positive territory, with year-to-date returns now up 62% — putting it on track for its best annual performance since its November 2021 listing.
Analysts attribute the uptrend to improving fundamentals across both Nykaa’s Beauty & Personal Care (BPC) and Fashion businesses, alongside continued growth in customer acquisition and operational efficiency.
Fashion segment stages a strong comeback
According to Nykaa’s September-quarter (Q2 FY25) business update, the company expects consolidated net revenue growth in the mid-twenties, backed by a strong rebound in its fashion vertical.
The Fashion segment’s Net Sales Value (NSV) is projected to grow in the higher mid-twenties, its best performance in over a year, signalling a turnaround in consumer demand. Sequential improvement in sales and profitability metrics also suggests stabilisation in the segment, which had earlier lagged behind Nykaa’s high-growth BPC division.
The company expects the fashion business to break even by FY26, with analysts at JM Financial suggesting this could occur as early as Q3 FY26.
While revenue growth from the vertical is expected to improve to the low twenties, it remains slightly below NSV growth due to lower advertising and marketing income. Nonetheless, the steady recovery highlights growing traction for Nykaa’s curated fashion platform and premium brand partnerships.
BPC continues to anchor Nykaa’s performance
Meanwhile, Nykaa’s beauty and personal care division continues to be the company’s primary growth driver. Revenue and NSV in the BPC vertical are projected to grow in the mid-twenties, maintaining a consistent multi-quarter streak of double-digit expansion.
The company’s “House of Nykaa” portfolio — including Kay Beauty, Nykaa Cosmetics, and acquired labels like Dot & Key — continues to contribute significantly to overall growth.
Industry experts note that India’s $28 billion beauty and personal care market remains resilient despite a broader slowdown in urban discretionary spending, with premium and luxury categories seeing sustained demand from affluent consumers.
Analysts see margin expansion ahead
With both verticals gaining momentum, analysts expect Nykaa’s operating leverage to improve in the coming quarters. JM Financial projects the company’s EBITDA margin to expand by 155 basis points year-on-year to 7.1% in Q2 FY25, reflecting higher efficiency and better cost control.
Market observers also note that Nykaa’s ability to balance high-growth verticals with profitability targets is restoring investor confidence that had waned after its 2022 post-listing slump.
Conclusion
Nykaa’s sustained rally underscores renewed optimism around its dual-engine model of beauty and fashion. As the company enters the festive quarter with strong demand tailwinds and improving margins, investors are betting on continued momentum into FY26.
If the stock sustains its current levels, 2025 could mark Nykaa’s strongest year since debut, reaffirming its leadership in India’s fast-growing beauty and fashion e-commerce sector.