FSN E-Commerce Ventures Ltd

From skincare routines to fashion trends, Gen Z is transforming how India consumes. This digital-first generation doesn’t just buy; they curate experiences, demand personalization, and look for authenticity in every swipe and scroll. As India’s 440-million-strong Gen Z cohort begins to dominate discretionary spending, platforms built to speak their language stand to gain immensely. Nykaa, India’s leading content-led, lifestyle retail platform, is at the forefront of this generational shift [EasyDNNnews:PaidContentStart]

Company Overview: A Digital Lifestyle Powerhouse
Founded in 2012, FSN E-Commerce Ventures Ltd (Nykaa) is a digitally native consumer-tech platform offering beauty, personal care, and fashion products across online and offline channels. The company operates a differentiated, content-led model, allowing for deep brand discovery and consumer engagement. Today, Nykaa serves over 42 million customers across India under its “One Nykaa” ecosystem, integrating platforms, verticals, and supply chains across Beauty & Personal Care (BPC), fashion, owned brands, and eB2B distribution.

Industry Overview
Nykaa operates at the intersection of beauty and fashion, two of the most vibrant and fast-growing verticals in India’s discretionary consumption and e-commerce landscape. The Indian e-commerce market, currently valued at USD 60 billion, is expected to grow nearly 3x to USD 170-190 billion by 2030. Beauty and fashion together already account for 23 per cent of total online spending-a figure projected to reach 33 per cent by the end of the decade. These categories also make up around 25 per cent of discretionary spending, which in turn contributes 53 per cent of total retail expenditureunderlining their structural importance in the Indian consumption story.

At the heart of Nykaa’s business is the online BPC segment, which has shown exceptional growth-delivering a 40-42 per cent CAGR between 2020-2025, and expected to continue at a 23-25 per cent CAGR through 2030. Online fashion, Nykaa’s second key vertical, is also on a similar growth trajectory. What makes Nykaa particularly well-positioned is its strategic focus on the premium-to-luxury segment, where the addressable market is projected to triple by 2030, growing at a 25-30 per cent CAGR. This higher-end positioning not only supports superior margins but also aligns well with rising consumer aspirations.

A significant long-term growth enabler for Nykaa is the ongoing transition from unorganised to organised retail, particularly in BPC and fashion. Organised penetration in BPC is expected to rise from 48 per cent to over 60 per cent, while in fashion, the shift is even more pronounced-from 39 per cent to 60 per cent. This evolution is driven by increasing digital adoption, a growing preference for trusted brands, and a rising focus on quality and curation-all areas where Nykaa already has strong execution capabilities. As consumers shift online and seek reliable retail experiences, Nykaa stands to gain share through both product breadth and trusted engagement.

The biggest long-term catalyst for Nykaa is the changing face of the Indian consumer. Gen Z, which comprises 26 per cent of the population today, is expected to drive nearly 50 per cent of India’s total consumption by 2030. While just 23 per cent of their spending is currently direct (with their own income), this is expected to rise to 53 per cent-significantly expanding their purchasing power. Their influence on household spending is already material. With strong brand resonance among Gen Z and millennials, an omnichannel presence, and a tech-first retail experience, Nykaa is structurally positioned to ride this demographic consumption wave-offering investors a highconviction, long-duration growth story in India's evolving consumer economy.

Business Segments
Nykaa operates through multiple business segments under its broader ecosystem known as One Nykaa, which brings together various platforms, channels, and verticals across beauty, fashion, and lifestyle.

■ Beauty Multi-brand Retail (BPC): This is Nykaa’s core segment, offering a wide range of beauty and personal care products through both online platforms and offline stores across India.
■ Fashion: Nykaa Fashion caters to premium online shoppers, targeting young, trend-focused consumers with a curated selection of apparel, footwear, and accessories.
■ House of Nykaa (Owned Brands): This segment includes Nykaa’s in-house brands across beauty and fashion. It plays a key role in driving innovation and building a direct connection with consumers.
■ eB2B - Superstore by Nykaa: This platform serves small retailers in the beauty and personal care space, offering tech-driven supply solutions to the largely underserved retail market.

Nykaa’s GMV was primarily driven by BPC Online at 59 per cent, followed by Fashion at 20 per cent. House of Nykaa (Beauty and Fashion) contributed 11 per cent and 3 per cent respectively, while BPC Offline and Superstore each added 6 per cent; new businesses made up less than 1 per cent, with overlaps causing the total to exceed 100 per cent.

Pan-India Presence and Distribution Network
Nykaa’s reach spans 99 per cent of Indian pincodes via its online platform, with 237 physical stores across 79 cities and 44 warehouses supporting fulfillment. Its Superstore B2B vertical serves over 1,100 cities and operates through 16 dedicated warehouses. Cumulatively, Nykaa has a customer base of 42 million, offering products from over 200 brands cementing its position as a nationwide beauty and fashion retail leader.

Financials
FSN E-Commerce Ventures Limited, posted a strong financial performance in FY25. The company recorded a Gross Merchandise Value (GMV) of ₹15,600 crore, growing 25 per cent YoY. Over the last five years, One Nykaa’s GMV grew at a 42 per cent CAGR-much faster than the 20 per cent CAGR of the overall Indian e-commerce market. Net revenue stood at ₹7,950 crore, up 24 per cent YoY. On the profitability front, EBITDA rose 37 per cent to ₹474 crore, with margins improving to 6 per cent. Profit before tax jumped 85 per cent to ₹127 crore, and profit after tax grew 81 per cent to ₹72 crore. Margins improved slightly across the board-PBT margin at 1.6 per cent and PAT margin at 0.9 per cent.

The company’s return ratio also improved. Return on Capital Employed (ROCE) rose to 11.3 per cent from 7.5 per cent last year, showing better returns on investments. Net worth increased by ₹62 crore to ₹1,343 crore. Working capital days reduced to 34 days, improving by 10 days YoY, which indicates better inventory and receivables management. Overall, Nykaa continues to grow steadily in both topline and bottomline while maintaining cost discipline.

The company's GMV mix was led by its core BPC Online segment, contributing 59 per cent, followed by Fashion at 20 per cent. The House of Nykaa - Beauty and Fashion segments accounted for 11 per cent and 3 per cent respectively, while BPC Offline and Superstore each contributed 6 per cent. New businesses made up less than 1 per cent of the GMV. It is important to note that the total exceeds 100 per cent due to the overlap of House of Nykaa GMV with other omnichannel verticals.

Business Segments Outlook
Nykaa’s Beauty Multi-brand Retail segment is projected to grow its GMV at a mid-20 per cent CAGR, with the beauty customer base expected to reach 33 million by FY30. Growth will be driven by offline expansion to 500+ stores across 100+ cities, deeper penetration into Tier 2 and 3 markets, and premiumisation through curated beauty regimens and marketing. Enhanced convenience via local warehousing and adoption of AI-led beauty tech will further support this growth.

Nykaa Fashion is positioning itself in the premium segment with a best-in-class average order value about 2x the industry average. Around 85 per cent of its customers are Gen-Z and young millennials, with over 70 per cent of traffic from iOS and premium Android devices. The segment targets 3-4x GMV growth over the next five years from its FY25 base of ₹3,800 crore, driven by new customer acquisition, brand expansion, and improved personalisation. Management expects EBITDA breakeven in FY26 and ~10 per cent steady-state margin by FY30, supported by lower marketing spends (from 29.4 per cent to ~15 per cent of NSV), a stronger repeat base, higher own-brand mix, and operating leverage.

House of Nykaa (Owned Brands) aims to scale its portfolio to a GMV of ₹6,000 crore by FY30, growing at a 30 per cent CAGR, with a long-term EBITDA margin target of around 30 per cent. The company has built a portfolio of 12 consumer brands across beauty and fashion, which generated ₹2,100 crore GMV in FY25—₹1,700 crore from beauty and ₹400 crore from fashion. Growth will be led by deeper play in categories like fragrances, bath & body, and clean beauty, supported by increased offline reach and selective global expansion.

Key brands include Dot & Key, which scaled 12x in three years and leads in sunscreens and eye creams with 20,000+ offline points; Kay Beauty, among the top 5 makeup brands on Nykaa, now launched in the UK via Space NK; and Nykaa Cosmetics, a mass-premium brand with 8 million+ customers and over 38,000 distribution points.

Going forward, the company plans to enter high-growth adjacencies, grow fashion-owned brands in lingerie, Indian wear, and athleisure, and improve profitability as the brand mix shifts toward higher-margin owned products.

Superstore by Nykaa aims to scale 3x and expand to over 3,200 cities and 19,000+ pincodes, with plans to quadruple its size and achieve EBITDA break-even at that level. Growth will be driven by deeper presence in beauty and wellness categories and improved unit economics. Between FY23 and FY25, fulfillment, warehouse, and S&D costs per order were reduced by 60 per cent, 40 per cent, and 50 per cent respectively, while gross profit per order improved 1.5x. Further gains are expected through scale, zonal warehousing, lower returns, and techdriven efficiency.

Increasing Efficiency through AI
For FY26, Nykaa plans to launch 40+ GenAI initiatives across consumer, partner, and internal teams to enhance efficiency and scale. It aims for 50 per cent of developer code to be AI-generated and expects AI bots to handle 70 per cent of customer service load, building on its NyNaa voicebot. The company is targeting a 30 per cent productivity gain by embedding AI across key functions. Key AI tools include Semantic Search for beauty, GenAI-powered content, Nykaa Muse (AI Fashion Stylist), and Nykaa Pulse (AI brand intelligence platform).

Valuation & Outlook
We believe Nykaa is well placed to deliver strong growth, led by its core Beauty & Personal Care (BPC) segment, which contributes nearly 60 per cent of total GMV. As a result, we project consolidated revenue to grow at 25-30 per cent CAGR over FY26-FY28E. With Fashion and eB2B segments expected to scale 3-4x over the next five years, and the House of Nykaa portfolio targeting a 30 per cent CAGR till FY30, the company has multiple levers for value creation in the medium term. Given the structural tailwinds in BPC, with the category expected to reach a market size of $40-45 billion by 2030, we see strong visibility on growth and margin expansion over the medium period.

EBITDA margins are expected to expand from the current 6 per cent to higher single digits over FY26-FY28E, driven by scale benefits and improving profitability in the Fashion and eB2B segments. Additionally, the high-margin nature of the House of Nykaa portfolio-targeting ~30 per cent EBITDA at steady state-will play a key role in lifting overall margins. As these segments mature and contribute more meaningfully to the revenue mix.

Following elevated capex in FY23-24, primarily towards building warehousing and tech infrastructure, Nykaa’s capital spending is expected to return to more sustainable levels. The focus now shifts towards funding expansion of retail stores and scaling AI capabilities. With major infrastructure investments largely behind, the company is unlikely to face material balance sheet pressure. Growth going ahead is expected to be supported by internal accruals, with free cash flow generation likely to gain momentum post FY26.

Nykaa operates in a fast-growing beauty and personal care market, with a Total Addressable Market (TAM) projected to reach ₹15.3 lakh crore by FY30. Assuming 47.5 per cent of this becomes organized (~₹7.27 lakh crore), and Nykaa captures a mid-range 17.5 per cent market share (given its premium positioning), its potential revenue opportunity stands at ₹1.27 lakh crore by FY30. Against FY25 sales of ₹7,950 crore, this implies an extremely aggressive 5-year revenue CAGR of ~70 per cent, which is unlikely to occur linearly. At the current market cap of ₹61,523 crore, P/E of 931, and PEG of 21.5, the stock is implicitly pricing in ~43 per cent annual earnings growth-still significantly below the revenue CAGR required to justify full TAM capture.

Currently, the company is working on a very thin margin of less than one per cent. While we estimate more realistic revenue growth of 25–30 per cent CAGR over the next five years, the valuation suggests a substantial portion of future growth is already priced in, leaving limited upside unless Nykaa materially exceeds expectations. We recommend a HOLD rating on the stock at current levels.

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