Nykaa (FSN E-Commerce): A Listed Consumer Internet Company That Stayed Profitable

Last updated 30 Oct 2026, with FY26 results. Figures are taken from the company's investor presentation, annual report and exchange filings, and the news reports listed under Sources. This is an educational case study, not investment advice.

Why this case matters

Most Indian consumer internet companies that listed in 2021 were losing money. FSN E-Commerce Ventures Ltd, which runs Nykaa, was an exception: it listed while profitable and has continued to report profits, though on thin margins.

Nykaa is a useful contrast to marketplace-only businesses. Because a large part of its beauty business holds inventory, its accounts look more like a retailer's: gross margin, inventory and fulfilment costs matter as much as growth.

The business model

The company describes four growth engines:

Beauty: online and offline sale of cosmetics, skincare, haircare and fragrance, through Nykaa's own inventory and a marketplace.
Fashion: apparel, footwear and accessories, under marketplace, sale-or-return and just-in-time inventory models.
B2B: distribution of beauty products to retailers.
House of Brands: Nykaa's own and acquired brands, which usually carry higher gross margins.

Two operating details from the FY25 annual report give a sense of scale: 44 warehouses across 15 cities at 31 March 2025, and a cumulative customer base of over 42 million. In the last quarter of FY25 the company launched "Nykaa Now", a two-hour delivery service in seven cities.

The IPO

The ₹5,352 crore IPO was priced at ₹1,125 a share, made up of a fresh issue of about ₹630 crore and an offer for sale of about ₹4,721 crore. It was subscribed about 82 times, as reported. The shares listed on 10 November 2021 at ₹2,018 on the NSE, about 79% above the issue price, and the market value crossed ₹1 lakh crore on the day, according to Business Standard.

Key financials

From the company's Q4 and FY25 investor presentation:

₹ crore	FY24	FY25	Growth
Revenue from operations	6,386	7,950	24%
Gross profit	2,739	3,477	27%
Gross margin	42.9%	43.7%
Fulfilment expenses	608	742	22%
Marketing and S&D expenses	891	1,211	36%
Contribution profit	1,239	1,524	23%
Employee expenses	565	666	18%
Other expenses	328	384	17%
EBITDA	346	474	37%
EBITDA margin	5.4%	6.0%
Profit before tax	69	127	85%
Profit after tax	40	72	81%
PAT margin	0.6%	0.9%

Consolidated GMV for FY25 was ₹15,604 crore, up 25%, according to the FY25 press release.

Reading the numbers

The P&L is a stack of margins

Nykaa's own presentation walks from revenue to profit in steps, which is a good template for any D2C business:

Gross margin (43.7% in FY25): what's left after the cost of goods sold.
Contribution margin (19.2%): after fulfilment and marketing, the two costs that grow with each order.
EBITDA margin (6.0%): after employee and other fixed costs.
PAT margin (0.9%): after depreciation, finance cost and tax.

From ₹100 of revenue, about ₹43.7 is left after product cost and only about ₹0.9 at the bottom line. Small changes in discounting or marketing move profit sharply.

Operating leverage did the work

Between FY24 and FY25, employee expenses fell from 8.8% to 8.4% of revenue and other expenses from 5.1% to 4.8%. Marketing went the other way, up from 14.0% to 15.2% of revenue on the presentation's "Marketing and S&D" line. The company's annual report puts marketing at 12.5% of revenue, up from 11.6%, on a narrower definition. EBITDA rose 37% against revenue growth of 24%.

Fulfilment as a lever

The CFO's message in the FY25 annual report says fulfilment expenses fell from 13.3% of net sales value in FY20 to 9.5% in FY25, and average delivery time improved from 4.5 to 2.0 days, as more warehouses brought stock closer to customers.

FY26 update

FY26 (year ended 31 March 2026) was the company's strongest year so far, per its press release and investor presentation of 21 May 2026:

₹ crore	FY25	FY26	Growth
GMV	15,604	19,963	28%
Revenue from operations	7,950	10,022	26%
Gross profit	3,477	4,516	30%
Gross margin	43.7%	45.1%
Fulfilment expenses	742	959	29%
Marketing and S&D expenses	1,211	1,537	27%
Contribution profit	1,524	2,020	33%
EBITDA	474	752	59%
EBITDA margin	6.0%	7.5%
Profit after tax	72	204	183%
PAT margin	0.9%	2.0%

Revenue crossed ₹10,000 crore (about USD 1 billion, as the company put it). The margin stack widened at every level: gross margin up 132 basis points, contribution margin from 19.2% to 20.2%, and EBITDA margin up 155 basis points. The company also cited better working capital as a reason PAT grew faster than EBITDA.

Revenue from operations, ₹ crore Consolidated. Source: FSN E-Commerce Ventures investor presentation Q4 FY26.

Profit after tax, ₹ crore Consolidated. Source: FSN E-Commerce Ventures investor presentation Q4 FY26.

EBITDA, ₹ crore EBITDA margin: 5.0%, 5.4%, 6.0% and 7.5% of revenue. Source: FSN E-Commerce Ventures investor presentation Q4 FY26.

What went right

Profitable growth. Profit before tax rose 85% to ₹127 crore in FY25, with revenue up 24%.
Gross margin expansion of 84 basis points, helped by the mix of higher-margin own brands.
Disciplined fixed costs, so most of the incremental gross profit flowed to EBITDA.

What to watch

Thin net margin. Even after improving to 2.0% in FY26, the PAT margin leaves little room for error if competition forces more discounting.
Marketing intensity is rising, with marketing growing faster than revenue in FY25.
Fashion and new formats such as quick delivery carry their own costs before they scale.
Valuation vs earnings. The 2021 listing valued the company at over ₹1 lakh crore on far smaller profits, so the share price has been sensitive to growth expectations.

Finance, accounting and audit lessons

Know which revenue model applies to each line. Inventory sales are recognised gross; marketplace commissions are recognised net. Mixed models need clear principal-versus-agent judgements under Ind AS 115.
GMV is not revenue. Report and reconcile both, and explain the gap (marketplace sales, discounts, returns and cancellations).
Inventory needs controls. Holding stock means valuation at the lower of cost and net realisable value, provisions for expired or slow-moving goods, and physical verification across many warehouses.
Sale-or-return arrangements need care. Expected returns reduce revenue and need a refund liability and a right-to-recover asset.
Build the P&L as a margin stack. Contribution margin per order is the number that tells you whether growth creates or destroys value.
Leases matter. Warehouses and stores bring Ind AS 116 right-of-use assets and lease liabilities, which shift cost from rent to depreciation and interest and lift EBITDA.

Key takeaways

Nykaa listed in November 2021 at about a 79% premium and has remained profitable.
FY26 revenue was ₹10,022 crore (up 26%), EBITDA ₹752 crore (7.5% margin) and PAT ₹204 crore (2.0% margin).
FY25 revenue was ₹7,950 crore (up 24%), EBITDA ₹474 crore (6.0% margin) and PAT ₹72 crore (0.9% margin).
Margins improved through gross-margin mix and operating leverage, while marketing spend rose faster than revenue.
For D2C and retail businesses, the lesson is to manage the margin stack line by line, not just top-line growth.

Frequently asked questions

How is GMV different from revenue for Nykaa?

GMV (gross merchandise value) is the total value of orders placed, before cancellations, returns and discounts and including marketplace sales by third parties. Revenue from operations is what the company recognises under Ind AS. In FY25 Nykaa reported GMV of ₹15,604 crore and revenue of ₹7,950 crore.

Does Nykaa hold its own inventory?

Its beauty business works largely on an inventory model alongside a marketplace, and the fashion business uses marketplace, sale-or-return and just-in-time inventory arrangements, according to the company's filings.

Why is the profit margin so thin?

The company spends heavily on marketing and fulfilment to grow. In FY25 its PAT margin was 0.9% of revenue, as per its investor presentation.

Sources

General information only, not professional advice. Rules change; check the current law and your facts before acting.