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FY25 Annual Investor Day – A compelling growth story
Nykaa’s Investor Day showcased the company’s aggressive growth aspirations across BPC and Fashion segments, with its eB2B business already witnessing strong growth momentum. The company also guided towards FY26 EBITDA breakeven for Fashion, earlier than our FY27 estimate. While management refrained from providing BPC EBITDA margin guidance due to its continued focus on growth, we expect contribution margins to remain stable, with EBITDA margin expansion likely supported by operating leverage. Nykaa’s suggestion of mid-20s GMV growth in BPC and a 3-4x increase in Fashion NSV over the next five years reflect management’s strong confidence in scaling multiple growth levers, reinforcing its distinctive market positioning. Moreover, the company’s ability to deliver robust growth in a tepid demand environment over the last year along with margin enhancement further underlines its differentiated offering. We maintain a ‘BUY’ rating with a Mar’26 TP of INR 250.
* Immense headroom for growth in BPC: With FY25 GMV rising 30%, company expects to sustain growth momentum around mid-twenties in the medium term with its two-fold strategy: 1) Deepening market penetration by investing in acquisition of quality customers through online personalisation and expansion of retail footprint in Tier 2+ cities. The company plans to increase its current network of 237 stores in 79 cities to 500+ stores across 100+ cities by FY30; 2) Premiumisation through expanding category width and depth for higher beauty consumption, aspirational marketing for premium beauty, and customer engagement through events and in-app/in-store experiences. Nykaa remains at the forefront of premium beauty in India, with its premium customers spending ~9x the platform average and its top 10% customers spending USD 395 annually, similar to spending levels in developed countries. The management reiterated its strategy to continue investing in growth, while maintaining healthy profitability at the current levels.
* Fashion playbook ready to scale with profitability in sight: The management aims to drive rapid growth in Nykaa Fashion with suggestions of NSV reaching 3-4x of the current scale in the next 5 years. This robust growth trajectory is also expected to see rising profitability with EBITDA margin (as a % of NSV) breakeven by FY26 (-8.3% in FY25). By FY28, margin is expected to reach mid to high-single digits, with steady state goal of ~10%. The expected ~1000bps improvement is likely to come from CM improvement, driven by improved conversion rates, lower CAC of retained customers, increasing mix of own brands and growth in LBB which is directly accretive to bottom line. Additionally, ~850bps improvement is expected from operating leverage on overhead costs. While management is guiding for breakeven in FY26, this remains contingent on recovery in discretionary consumer spending. As such, we conservatively project breakeven by FY27.
The company strives to leverage technology to provide consumers with a hyperpersonalised experience and engaging shopping experience. Initiatives like NF Edit (curated selections by trend and occasion) and Nykaa Muse (an AI-powered styling assistant) are aimed at enhancing user engagement and discovery. Nykaa Fashion continues to expand its brand portfolio, particularly premium, with partnerships now extending to ~4,500 brands across D2C, national and global brands. More marquee brands launches are planned in 2HFY26.
* Reiterate ‘BUY’, Mar’26 TP of INR 250: Despite unfavourable demand environment, Nykaa has delivered against the odds to improve margins while delivering industry-leading growth across segments. Furthermore, our channel checks suggest that the company continues to gain market share in both online BPC and Fashion. At c.INR 2.7bn, we believe the investment-phase segments’ loss has peaked in FY25. We reiterate ‘BUY’ with Mar’26 TP of INR 250 (~21% upside) as Nykaa remains one of the highest compounding consumption plays in India. While current valuations may appear stretched on FY27 basis, we believe that one should adopt a longer-term perspective, as Nykaa’s high-growth trajectory and compounding remain intact over the medium to long term.
* Strong revenue growth to sustain in BPC, supported by improving GSV to NSV conversion: Nykaa’s BPC segment has seen its cumulative consumer base grow from 8mn in FY20 to 34mn in FY25, reflecting a robust 34% CAGR. Notably, 7mn users were added in each of FY24 and FY25. Assuming a similar addition in FY26, combined BPC segment GMV growth may dip from the ~30% in FY25 due to a higher base. However, revenue growth is expected to remain intact in mid-twenties, driven by improved GMV to NSV conversion. It may be noted that GMV to NSV conversion was lower in FY25 due to higher investments towards customer acquisition, an impact expected to normalise going forward.
* Delivering convenience through Nykaa Now: ‘Nykaa Now’ is Nykaa’s rapid delivery initiative which offers deliveries within 60 minutes, with a broader promise of under 2- hour fulfilment. What differentiates ‘Nykaa Now’ is its extensive assortment which other QC platforms lack and with BPC customers being extremely SKU specific, this moat is expected to stand strong. Moreover, unlike QC 10-minute models, Nykaa Now prioritises access to a curated assortment with modest dark store density, enabling faster breakeven economics. Currently active in 7 key metro cities, the service has shown strong initial traction, having delivered 1mn+ orders. While AOVs may trend lower given higher frequency, overall annual consumption value (ACV) remains incremental. Management highlighted that this initiative aims at increasing the company’s market share in personal care, a category where speed of fulfilment is critical. The initiative also acts as a strategic retention lever, ensuring Nykaa’s loyal customers don’t shift to competing platforms. With ~70% of orders already delivered same/next day in the top 110 cities, Nykaa Now represents a natural progression in the company’s convenience play
* Superstore continues to be a key strategic pillar: With offline channels enjoying a rather large pie of the total beauty market and a notable underpenetration of eB2B in overall B2B retail (2.5-3.5% in 2025P), SuperStore presents Nykaa with an opportunity of a large TAM as well as addressing inefficienes across the market spectrum i.e. the brands as well as the retailers. The platform has scaled ~3x over FY23-25, reaching 276k retailers in 1,100+ cities across ~12k pincodes. Notably, around 89% of Superstore's revenue came from Tier 2+ cities, reiterating the company’s focus on serving the underserved while widening the BPC funnel. Interestingly, even large FMCG brands partner with Nykaa despite their own extensive distribution reach, as Nykaa leverages data and tech to drive growth of their non-core SKUs. The company expects to break-even at 4x of its current scale. Growth will be driven by geographic expansion (targeting 3,200 cities across 19k pincodes), while profitability is expected to improve through 1) higher mix of non-core SKUs and House of Nykaa brands; 2) increased ad monetisation; 3) lower fulfilment costs through operational efficiency and 4) enhanced warehouse efficiency. We project ‘SuperStore’ to achieve ~4x scale and reach breakeven by FY29.
* House of Nykaa gaining strength: Through a lot of thought and attention to detail, Nykaa has successfully developed its own brands (House of Nykaa), delivering top-quality and trendy products to its customers. The company has launched 12 brands across all major categories, including makeup, skincare, haircare and fragrances in BPC, and indian/western wear, athleisure, lingerie, footwear and accessories in Fashion. These brands have collectively achieved GMV of INR 2,100cr. Within this, the 7 BPC brands have delivered INR 1,700cr GMV, growing at 48%+ CAGR over the last 5 years. Dot&Key has crossed INR 5bn GMV mark, while Nykaa Cosmetics and Kay Beauty are in INR 2-5bn range. These brands rank among the top brands on Nykaa.com across skincare and makeup. Notably, Kay Beauty is set to launch in UK with Space NK, the country’s fastest growing beauty retailer. Additionally, these brands are performing across multiple platforms, beyond just Nykaa’s online store. The company aims to scale House of Nykaa BPC to INR 6,000cr GMV by FY30.
* Management Guidance and Other Updates: BPC 1) GMV is expected to grow at mid20s% on a CAGR basis over FY25-30E. 2) Contribution margin should be in line with current levels, as the company will continue investing in customer acquisition and improving customer retention. 3) Retail footprint should expand to 500+ stores acorss 100+ cities by FY30E. Fashion 1) NSV is expected to grow ~3-4x in the next five years. 2) Improvement in marketing efficiencies, mix of own brands, fulfilment costs, market expenses and overheads should lead to EBITDA margin expansion by ~1,850bps to reach steady state margins. Additionally, the segment should turn EBITDA margin breakeven by FY26E, with steady state margins at ~10%+. Superstore 1) EBITDA breakeven should be reach at 4x of current scale. 2) In the medium-term, the company is aiming for GMV to reach ~3x. House of Nykaa 1) House of Nykaa BPC GMV is expected to grow at 30% CAGR to reach INR 6,000cr+ GMV by FY30E. International 1) Company made a strategic move of expanding its global footprint under the brand ‘Nysaa’ to tap into the GCC beauty market with website going live in Jan’24 and the first store opening up in Mar’24. Currently, there are four operational stores, with 2-3 more expected to open in the coming quarter. While progress has been slower than initially anticipated, the company maintains that the initiative remains on track and has indicated that further updates will be shared in the next six months.
* Triangulation of BPC EBITDA Margin: Nykaa’s BPC vertical comprises of four distinct verticals – 1) Online platform, 2) Physical stores, 3) eB2B, and 4) House of Nykaa – each with a different margin profile. The first two, being more mature, have already achieved a healthy profitability levels (Exhibit 4). However, as newer and faster-growing businesses like eB2B start contributing a larger share to the overall beauty mix, the blended margin improvement may appear muted. That said, the company continues to prioritise growth, while maintaining a strong margin profile in its established businesses, implying minimal risk of margin dilution. Moreover, the two mature businesses also offer multiple levers for incremental profitability, including 1) rollout of new ad formats, 2) faster growth of premium brands, 3) outperformance of owned brands vs. the platform, and 4) operating leverage.
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