Nykaa announces a 193% yoy profit surge: What’s in store for investors

Nykaa, operated by FSN E-Commerce Ventures, just reported a staggering 193% year-on-year (YoY) surge in consolidated profit after tax (PAT) for Q4 FY25, with profit climbing to Rs. 20 crores from almost Rs. 7 crores in the same quarter last year. These numbers signal at deeper shifts in Nykaa’s business model, cost discipline and market strategy. But what does this mean for you as an investor, and what should you watch for in the coming quarters?

A deep dive into the numbers

Nykaa’s Q4 FY25 financials are hard to ignore -

• Net Profit: Rs. 20 crores, up 193% YoY.

• Revenue from Operations: Rs. 2,062 crores, a 24% YoY increase.

• EBITDA: Rs. 133 crores, up 43% YoY, with margins improving to 6.5% from 5.6% last year.

• Annual Revenue: Rs. 7,950 crores, up 24% YoY.

What is driving Nykaa’s performance?

1. Beauty business outshines

Nykaa’s relentless focus on its core beauty and personal care (BPC) business has been the reason behind this growth. The company’s investments in customer acquisition, expansion of its omnichannel network (adding 19 new stores in Q4 alone), and partnerships with global brands like Chanel and Supergoop have paid off. Nykaa’s “House of Nykaa” strategy, which entails developing and scaling its own brands, has also contributed to margin expansion and customer stickiness.

2. Fashion segment

While the fashion vertical remains a drag on overall profitability, the segment is showing signs of recovery. GMV for fashion grew 18% YoY in Q4, and annual revenue from fashion increased by 19%. Losses in this segment narrowed, with EBITDA margin losses improving from -10.3% to -8.3%. The addition of over 800 new brands, including Rare Rabbit, Snitch, and Victoria’s Secret, signals a commitment to building a more robust fashion portfolio.

3. Advertising and brand partnerships

Advertising expenditure (adex) climbed 31% to Rs. 244 crores in Q4, with the beauty vertical accounting for Rs. 157 crore and fashion for Rs. 84 crores. This aggressive marketing has helped Nykaa maintain its leadership in the beauty segment and drive brand awareness.

Market reaction - Why did the stock drop?

Despite these stellar numbers, Nykaa’s shares fell nearly 4% after the results. The answer lies in expectations and segmental performance. While the beauty business is thriving, the fashion vertical’s continued losses and the sequential dip in profit and revenue (down 2% and 9% from Q3, respectively) tempered investor enthusiasm. Many market participants remain divided – some see long-term value in Nykaa’s differentiated positioning, while others are wary of slow fashion recovery and rich valuations.

What should you watch going forward?

1. Margin trajectory and segmental mix

Analysts expect EBITDA margins to improve further, potentially reaching 7.5–8.8% over the next two years as operating leverage kicks in and the fashion segment recovers. But the pace of margin expansion and fashion’s path to profitability will be key metrics to monitor.

2. Competitive landscape

Nykaa faces stiff competition from both traditional retailers and new-age quick commerce players. Sustaining high growth rates in beauty, while turning around fashion, will require continued innovation and brand partnerships.

3. Valuation and market sentiment

At a closing price of around Rs. 195–201, Nykaa trades at a premium compared to peers, reflecting its leadership in BPC and omnichannel reach. Whether this premium is justified will depend on the company’s ability to deliver consistent profit growth and unlock value in fashion.

Conclusion

Nykaa’s 193% YoY profit surge in Q4 FY25 is more than just a statistical marvel. It proves the company’s strategic clarity in beauty, disciplined execution, and willingness to invest in future growth. However, as an investor, you can’t ignore the challenges that remain. The fashion vertical needs to accelerate its path to profitability, and Nykaa must continue to balance growth investments with margin expansion. If you’re bullish on India’s digital consumption story and believe in Nykaa’s brand-led approach, the current dip could be an opportunity. But as always, keep a close eye on segmental performance and evolving market expectations.