The fashion business of FSN E-Commerce Ventures Ltd (Nykaa) is showing signs of revival after several quarters of modest performance.
In Q2FY26, this vertical is expected to deliver net sales value (NSV) growth in the higher mid-twenties—its best performance in over a year, according to Nykaa’s pre-quarter update.
Early festive season demand and likely discretionary spending pickup following GST cuts could have buoyed sales. The stock responded positively, hitting a new 52-week high of ₹261.26 on Tuesday.
Catching up
Fashion, once the laggard, is now catching up with Nykaa’s growth engine, the beauty-and-personal-care (BPC) business. Strong traction in the core platform—driven by expanded brand assortment and robust customer acquisition—has helped the segment regain ground.
Net revenue for fashion is expected to grow in the low twenties in Q2FY26, compared with low-to-mid teens growth seen recently. Nykaa’s latest guidance expects the fashion vertical to break even in FY26, with analysts at JM Financial Institutional Securities projecting this could happen as early as Q3FY26.
While net revenue growth is slower than NSV due to lower advertising and marketing income, sequential improvements signal a recovery in consumer demand.
The BPC segment continues to anchor Nykaa’s overall performance. Revenue and NSV are projected to grow in the mid-twenties, extending a multi-quarter streak of double-digit expansion. “House of Nykaa” brands, including home-grown names such as Kay Beauty and Nykaa Cosmetics, and acquired labels like Dot & Key, remain key growth pillars. Growth is powered by the company’s ability to scale owned brands while maintaining a wide marketplace presence.
Margins watch
After a 23% consolidated revenue jump in Q1FY26, Nykaa expects Q2 growth to remain in the mid-twenties, with consolidated gross merchandise value (GMV) growth likely close to the thirties.
“Despite higher revenues, advertisement income as a percentage of sales might be lower, leading to steady Ebitda margins at ~6.7% (+20 basis points quarter-on-quarter) in Q2FY26F, with full-year estimates at ~7.2%/8.4%/9.3% in FY26F/27F/28F,” said Nomura Research in a report on 6 October.
Nykaa would need to scale margins in H2 to meet Nomura’s projections. In Q1FY26, margins stood at 6.5%, up 102 bps year-on-year.
Meanwhile, in this calendar year so far, the Nykaa stock has jumped 56%. For a company straddling two fast-growing consumer segments, festive demand and rising formal spending provide timely tailwinds. Still, rising competition, higher customer-acquisition costs and execution risks in scaling the fashion segment could spoil the party.
