Nykaa's profit triples, but fashion remains fragile

FSN E-Commerce Ventures Limited (NYKAA), the parent company of Nykaa, reported a 207% year-on-year jump in Q2 FY27 net profit to ₹101.2 crore. Revenue from operations grew 28% to ₹3,006 crore. At first glance, these are impressive numbers. But the real story is the difference in performance between its beauty and fashion businesses. Let's look at the numbers. Consolidated EBITDA increased 65% to ₹263 crore, while EBITDA margin expanded from 6.8% to 8.7%. Beauty continues to be the primary growth engine. Its net sales value grew 28%, with EBITDA increasing 51%. The company also reported 338 physical stores across 111 cities. Fashion is improving, but profitability remains thin. Its net sales value grew 47%, and its EBITDA margin turned positive at just 0.2%, compared with negative 3.5% a year ago. That is progress, but fashion has not yet become a meaningful profit contributor. There is another strategic development. Nykaa's board approved the acquisition of an 82% stake in Simply Nam Beauty for up to ₹33 crore. The acquisition gives Nykaa access to a premium, professional-grade makeup brand. My view: Nykaa is demonstrating operating leverage. Revenue is growing, margins are expanding and its owned-brand portfolio is gaining scale. However, I would not value the entire business based on consolidated profit growth alone. Beauty is doing much of the profitability work, while fashion still needs to prove its economics. My stance: Positive on the business, but I want to see fashion sustain profitability and owned brands generate meaningful returns on investment. The next two quarters should reveal whether margin expansion can continue alongside growth.