Shares of FSN E-Commerce Ventures, the parent company of Nykaa, fell as much as 3.8% to Rs 195.50 on Monday after the company’s March-quarter results showed strong growth in its beauty business but continued weakness in fashion margins, prompting a mixed response from brokerages. While most analysts retained a bullish view on the company’s beauty and personal care (BPC) performance, target prices and ratings varied sharply, reflecting divergent expectations on the pace of margin recovery and the impact of fashion segment losses.
Among brokerages, JM Financial, Nuvama, IIFL Capital, and Nomura maintained positive views on the stock, highlighting Nykaa’s resilient BPC segment and margin expansion, but Kotak Institutional Equities retained a ‘reduce’ rating, citing expensive valuations and continued weakness in fashion.
Kotak Institutional Equities revised its target price to Rs 185 from Rs 170, implying a 5.4% downside from Monday’s intraday low. The brokerage said, “We trim FY2025-27 EBITDA estimates by 3-4%, driven by higher losses in fashion and B2B.” Kotak noted the steep 880 basis points year-on-year drop in fashion contribution margins and said, “Reasonable growth trajectory, but valuations remain rich.”
Nomura, while maintaining a ‘neutral’ rating, raised its target price to Rs 216 from Rs 190, implying a 10.5% upside. The brokerage said, “Nykaa’s focus on onboarding new global brands, expanding stores and product curation should continue to drive strong revenue growth in BPC. But margin improvement thus far has been slow and needs to pick up for us to turn more constructive.”
Most brokerages pointed to the robust performance of Nykaa’s BPC segment, which saw a 31% YoY GMV growth in Q4FY25 and contributed significantly to margin improvement.
JM Financial reiterated a ‘buy’ rating and said, “Nykaa BPC segment is going from strength to strength…despite seasonality-driven operating deleverage.” The brokerage said it expects sharper margin improvement in the coming years, driven by customer repeat purchases and working capital gains. JM set a target price of Rs 250, suggesting a 27.9% upside from the current market price.
Nuvama also maintained a ‘buy’ rating, raising its target to Rs 235 from Rs 205. The brokerage cut FY26/FY27 earnings estimates by 6.7% and 6.0%, respectively, but said, “We are increasing medium-term growth and profitability.” This revised target implies a 20.2% upside from current levels.
IIFL Capital, too, kept a ‘buy’ call, with a target of Rs 220, or a 12.5% upside, saying, “Own brands remain a key growth and margin driver…Nykaa continues to outperform overall Beauty market growth despite competition.”
Fashion margins disappoint
Despite signs of recovery in fashion GMV—up 18% YoY in Q4FY25—margin pressures continue to raise red flags. Multiple brokerages highlighted this as a concern, even as some remained hopeful for a turnaround.
Elara Capital, which raised its target price to Rs 215 from Rs 195, acknowledged the fashion drag, stating, “Losses in fashion are likely hitting trough and recovery to be key monitorable.” The brokerage maintained an ‘accumulate’ rating, with a 10% potential upside.
JM Financial said it had “pushed Fashion segment breakeven to FY27”, citing ongoing marketing investments that weighed on margins.
Nomura noted, “EBITDA margin: Strong in BPC: 8.6%; weak in Fashion: -20%.” However, it welcomed Nykaa’s shift in strategy towards proprietary brands in fashion, including lingerie and western wear.
Q4 highlights and full-year context
Nykaa’s consolidated Q4FY25 revenue rose 24% YoY to Rs 2,267 crore, while profit after tax surged 193% to Rs 20 crore. However, on a sequential basis, both profit and revenue declined. EBITDA margin for the quarter stood at 6.5%, ahead of consensus estimates, and the company posted a full-year net profit of Rs 66 crore, doubling from FY24.
Nykaa’s BPC business remained the cornerstone of growth. For FY25, BPC GMV rose 30% YoY to Rs 11,775 crore. The company continued to scale its proprietary “House of Nykaa” brands and launched several global labels, including Chanel and Supergoop.
Fashion GMV grew 18% YoY in Q4, but the segment remains a drag on overall profitability.
Should you buy, sell or hold?
Brokerage opinions are split. Bulls argue that Nykaa’s differentiated positioning in BPC, global brand partnerships, and improving margins justify its current valuation. Bears point to extended fashion losses and slower margin recovery as risks.
Also read | Nykaa shares in focus after reporting 193% YoY surge in Q4 PAT
With target prices implying anything from a 5% downside to nearly 28% upside, market sentiment on Nykaa remains divided. The stock may appeal to those willing to bet on the company’s long-term growth in beauty and personal care, a segment where it continues to show strong execution. But for others, the persistent drag from fashion losses and an uneven margin trajectory could remain sticking points, at least in the near term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Among brokerages, JM Financial, Nuvama, IIFL Capital, and Nomura maintained positive views on the stock, highlighting Nykaa’s resilient BPC segment and margin expansion, but Kotak Institutional Equities retained a ‘reduce’ rating, citing expensive valuations and continued weakness in fashion.
Kotak Institutional Equities revised its target price to Rs 185 from Rs 170, implying a 5.4% downside from Monday’s intraday low. The brokerage said, “We trim FY2025-27 EBITDA estimates by 3-4%, driven by higher losses in fashion and B2B.” Kotak noted the steep 880 basis points year-on-year drop in fashion contribution margins and said, “Reasonable growth trajectory, but valuations remain rich.”
Nomura, while maintaining a ‘neutral’ rating, raised its target price to Rs 216 from Rs 190, implying a 10.5% upside. The brokerage said, “Nykaa’s focus on onboarding new global brands, expanding stores and product curation should continue to drive strong revenue growth in BPC. But margin improvement thus far has been slow and needs to pick up for us to turn more constructive.”
Most brokerages pointed to the robust performance of Nykaa’s BPC segment, which saw a 31% YoY GMV growth in Q4FY25 and contributed significantly to margin improvement.
JM Financial reiterated a ‘buy’ rating and said, “Nykaa BPC segment is going from strength to strength…despite seasonality-driven operating deleverage.” The brokerage said it expects sharper margin improvement in the coming years, driven by customer repeat purchases and working capital gains. JM set a target price of Rs 250, suggesting a 27.9% upside from the current market price.
Nuvama also maintained a ‘buy’ rating, raising its target to Rs 235 from Rs 205. The brokerage cut FY26/FY27 earnings estimates by 6.7% and 6.0%, respectively, but said, “We are increasing medium-term growth and profitability.” This revised target implies a 20.2% upside from current levels.
IIFL Capital, too, kept a ‘buy’ call, with a target of Rs 220, or a 12.5% upside, saying, “Own brands remain a key growth and margin driver…Nykaa continues to outperform overall Beauty market growth despite competition.”
Fashion margins disappoint
Despite signs of recovery in fashion GMV—up 18% YoY in Q4FY25—margin pressures continue to raise red flags. Multiple brokerages highlighted this as a concern, even as some remained hopeful for a turnaround.
Elara Capital, which raised its target price to Rs 215 from Rs 195, acknowledged the fashion drag, stating, “Losses in fashion are likely hitting trough and recovery to be key monitorable.” The brokerage maintained an ‘accumulate’ rating, with a 10% potential upside.
JM Financial said it had “pushed Fashion segment breakeven to FY27”, citing ongoing marketing investments that weighed on margins.
Nomura noted, “EBITDA margin: Strong in BPC: 8.6%; weak in Fashion: -20%.” However, it welcomed Nykaa’s shift in strategy towards proprietary brands in fashion, including lingerie and western wear.
Q4 highlights and full-year context
Nykaa’s consolidated Q4FY25 revenue rose 24% YoY to Rs 2,267 crore, while profit after tax surged 193% to Rs 20 crore. However, on a sequential basis, both profit and revenue declined. EBITDA margin for the quarter stood at 6.5%, ahead of consensus estimates, and the company posted a full-year net profit of Rs 66 crore, doubling from FY24.
Nykaa’s BPC business remained the cornerstone of growth. For FY25, BPC GMV rose 30% YoY to Rs 11,775 crore. The company continued to scale its proprietary “House of Nykaa” brands and launched several global labels, including Chanel and Supergoop.
Fashion GMV grew 18% YoY in Q4, but the segment remains a drag on overall profitability.
Should you buy, sell or hold?
Brokerage opinions are split. Bulls argue that Nykaa’s differentiated positioning in BPC, global brand partnerships, and improving margins justify its current valuation. Bears point to extended fashion losses and slower margin recovery as risks.
Also read | Nykaa shares in focus after reporting 193% YoY surge in Q4 PAT
With target prices implying anything from a 5% downside to nearly 28% upside, market sentiment on Nykaa remains divided. The stock may appeal to those willing to bet on the company’s long-term growth in beauty and personal care, a segment where it continues to show strong execution. But for others, the persistent drag from fashion losses and an uneven margin trajectory could remain sticking points, at least in the near term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
