Nykaa shares rally 8% after strong Q2 results; should you buy, sell or hold?

Nykaa shares target price: Shares of FSN E-Commerce Ventures, the parent company of beauty and fashion omnichannel player Nykaa, jumped nearly 6 per cent during the trading session on Monday after the company reported a strong set of numbers in the quarter ended on September 30, 2025. Brokerage firms, however, remain divided on the stock.

FSN E-Commerce Ventures reported a 243 per cent year-on-year (YoY) surge in the net profit at Rs 34.4 crore, while revenue soared 25.1 per cent YoY to Rs 2,346 crore for the September 2025 quarter. Nykaa's ebitda came in at Rs 158 crore, up 52 per cent YoY, while its Ebitda margin also expanded to 6.7 per cent for the period.

Gross merchandise value (GMV) climbed 30 per cent YoY to Rs 4,744 crore, led by robust 28 percent GMV growth in beauty and a sharp revival in fashion. House of Nykaa portfolio recorded a 54 percent YoY GMV growth, driven by sustained momentum in its owned beauty brands.

Following the updates, shares of Nykaa soared nearly 8 per cent to Rs 265.30 on Monday, commanding a total market capitalization more than Rs 75,000 crore. However, the stock remained marginally shy of its 52-week high at Rs 268, hit a month ago. It has soared more than 71 per cent from its 52-week low at Rs 154.90 in March 2025.

Overseas brokerage firm Morgan Stanley noted that Nykaa’s beauty segment maintained its momentum with 28 percent GMV growth and a 9 percent Ebitda margin. It expects strong performance in Q3, aided by festive demand and Nykaaland, its flagship beauty event. Morgan Stanley has an 'Overweight' rating on Nykaa with a target price of Rs 271.

Another global brokerage firm CLSA also has an 'outperform' rating, while raising its target price to Rs 298. It noted that improved profitability across both verticals, with beauty net sales value rising 27 per cent and fashion margins expanding 550 basis points year-on-year. It raised FY26-28 earnings estimates by 2-3 per cent.

Nykaa reported another quarter of robust growth with core BPC gaining further momentum while the fashion segment reported the fastest growth in almost two years. BPC segment delivered stable Ebitda margin sequentially while adding 1 million incremental customers, said JM Financial.

Overall, the company reported 25% YoY growth in revenue to reach Rs 2,350 crore with Ebitda margin reaching 6.8 per cent. With core BPC expected to sustain growth momentum along with a decline in losses in Fashion and eB2B, we expect the company to deliver sharp expansion in consolidated EBITDA margin," it added with a 'buy' and a target price of Rs 310.

Amidst premiumized valuation, any moderation in growth/margins or surge in competition (entry of Flipkart and Amazon in quick commerce) may lead to sharp de-rating. For FY25-28E, our revenue CAGR of 28.1% limits a further rerating, said Elara Capital.

"We pare FY26E Ebitda estimates by 8 per cent to factor in flat BPC margin in Q2. Growth acceleration is noteworthy, but elevated valuations may leave limited room for disappointment. We roll forward to FY28E and raise target price to Rs 260 (from Rs 225) – maintain Accumulate," it said.

"We suspect ad income continues to fall as skew of House of Nykaa in total NSV continues to rise. Ebitdam expanded 125 bps YoY to 6.8 per cent. BPC Ebitda expanded by 40 bps YoY to 9%, while fashion losses continue to ebb led by improved operating leverage and marketing efficiency," said HDFC Securities.

It has toned down our FY27/28 Ebitda estimates by 5/4 per cent respectively to account for a more gradual profitability build-up and downgraded Nykaa to SELL, with a DCF-based target of Rs 200 share, implying 67 times Sep-27 EV/Ebitda, it said, hinting nearly 25 per cent fall from today's highs.