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Nykaa reported 3QFY26 revenue update, indicating continued growth momentum with consolidated GMV/NSV growth expected in late twenties. BPC NSV/revenue picked up further from the healthy growth rate delivered in the past few quarters at 28-30%/26-27% YoY respectively, marginally better than JMFe. While Fashion NSV growth (c.24-26% YoY) is expected to be strong, revenue growth is expected in late-teens due to brand rationalisation in house of brands as well as base effect from higher mix of content income in 3QFY25. Baking in these estimates, we expect EBITDA margin to expand strongly by 130bps YoY, similar to 2Q. Overall, 3Q is expected to be a decent quarter led by strong seasonality and sustained execution. We expect the stock’s recent outperformance to sustain as the company continues to deliver as one of the cleanest compounding story in India. We roll forward to Mar’27 TP of INR 325 (vs. earlier INR 310). Maintain ‘BUY’.

* BPC momentum sustained: Combined BPC NSV growth is expected to be in late twenties YoY, broadly in-line with JMFe of ~28%. 3Q, being a seasonally strong quarter, has seen broadbased growth across businesses, driven by strong performance of House of Nykaa brands, a successful Pink Friday sale and robust new customer acquisition. Net revenue growth for the Beauty vertical is expected to be at the upper end of mid-twenties YoY, broadly in-line with JMFe of 26.5%. While eB2B would have seen GST-related impact in October, the business would likely have normalized in the remaining two months of the quarter. Hence, our triangulation suggests core BPC would largely have grown similar to combined BPC in 3Q.

* Nykaa Fashion maintains growth trajectory: Nykaa’s fashion vertical is expected to deliver NSV growth in mid-twenties YoY, lower than JMFe as we were expecting the segment to further ramp-up growth. The growth in 3Q was supported by improved traction in core platform, new brand additions and healthy customer acquisition. However, net revenue growth is expected to be in late-teens YoY, lower than NSV growth due to ongoing channel optimisation of owned brands. It would also be impacted due to base effect as content income is unlikely to have kept pace with the pick-up in platform growth.

* Consolidated performance: On a consolidated level, net revenue growth is expected to be upper mid-twenties YoY, in-line with JMFe of 26%. GMV and NSV growth is expected to be in late twenties YoY, slightly better than JMFe of 28% YoY. On margin front, we expect BPC contribution margin (CM) to improve 70bps YoY (-30bps QoQ), whereas Fashion CM is expected to improve 80bps YoY (+10bps QoQ). EBITDA margin is expected to improve 130bps YoY, indicating sustenance of robust margin improvement delivered in H1FY26.

* Reiterate ‘BUY’, roll forward to Mar’27 TP of INR 325: Due to steady growth performance, we only make minor tweaks to segmental GMV/NSV estimates while lowering revenue conversion marginally in Fashion. Resulting operating deleverage results in a c.1% dip in EBITDA. We expect the company to sustain growth momentum with higher BPC profits getting unburdened of the losses in eB2B gradually and Fashion in early FY27, if not in Q4FY26 itself. Roll forward to Mar’27 with TP of INR 325 (vs. INR 310 earlier), implying 55x FY28E EBITDA multiple. Reiterate BUY with Nykaa being one of the cleanest long-term compounding stories in India.

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