Broker’s call: FSN E-Commerce (Buy)

FSN E-Commerce Ventures’ (Nykaa) pre-quarter business update for Q2-FY27 suggests continued growth momentum in top line, with consolidated GMV expected to grow around 30 per cent while NSV growth is expected to be higher in the early 30s. Consolidated net revenue growth is likely to be in the late 20s.

The beauty business continued to deliver healthy NSV growth of late-20s y-o-y, ahead of JMFe of mid 20s despite a difficult base of festive spends starting early last year.

The strong quarter was supported by robust customer acquisition as well as repeat orders, sustained traction in House of Nykaa brands and LFL store sales growth of early 20s. Fashion too continued its solid performance as NSV growth is expected to be in the late-40s y-o-y, significantly ahead of JMFe of mid 30s on the back of new customer additions, assortment expansion and continued traction in Nike partnership. With both businesses continuing to scale well, we expect operating leverage to remain favourable, supporting another quarter of healthy earnings delivery.

While the business had delivered similar growth trends in Q1 as well, it is worth noting that the base for Q2 was tough because of shift in festive spends to Q3 this yea whereas last year spends had started in Q2 itself. This in turn also augurs well for Q3-FY27.

We maintain our estimates but roll-forward to Sep’27E for a revised TP of ₹405 (earlier ₹395); maintain Buy.

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