Nykaa Reports 153% Increase in Q2 Profit Amid Fashion Growth

Nykaa, the omnichannel lifestyle retailer, has reported a remarkable 153% increase in net profit for the second quarter of the financial year 2026, amounting to ₹33 crore. This surge is attributed to a robust recovery in its fashion segment and continued growth in its beauty offerings. The company’s operating revenue for the quarter rose by 25% to ₹2,346 crore, while expenses increased by a modest 24% to ₹2,298 crore.

Strong Performance in Fashion

The standout performer for Nykaa this quarter was its fashion division, which saw its gross merchandise value (GMV) climb by 37% year-on-year. This performance significantly outpaced the 10% growth recorded in the same period last year. The company also noted a narrowing of its earnings before interest, taxes, depreciation, and amortisation (EBITDA) loss margin, which decreased from 9% to 3.5%.

Falguni Nayar, founder and CEO of Nykaa, highlighted the impressive results, stating, "Our fashion business has shown exceptional growth this quarter, indicating a strong recovery and increasing consumer confidence."

Steady Growth in Beauty Segment

Nykaa's beauty segment has also maintained a strong trajectory, with its GMV increasing by 28% year-on-year, reaching ₹3,551 crore. This growth has been driven by heightened demand across both e-commerce and physical retail channels, as well as from Nykaa’s in-house brands under the House of Nykaa umbrella. The beauty division has consistently delivered over 25% GMV growth in recent quarters, underscoring its position as a key revenue driver for the company.

Challenges Facing UPI Merchants

In a related development, mid-sized merchants accepting Unified Payments Interface (UPI) payments are facing increased transaction charges despite the core UPI service remaining free. New costs associated with enhanced services, such as soundbox retail devices and credit-linked payments, are being implemented. The Reserve Bank of India and the National Payments Corporation of India (NPCI) have mandated full disclosure of these charges. While there has not yet been a significant rise in transaction declines from merchants, payment firms are reportedly preparing awareness campaigns regarding UPI-linked credit and card payments.

As the UPI model matures, merchants are becoming more cautious about new fees, transitioning from a previously free model to one where credit instruments are being introduced.

Recent Developments in the IPO Market

In other news, Tiger Global has exited its investment in Ather Energy, selling its entire 5% stake for ₹1,204 crore just after the post-listing lock-in period ended. The sale was made at an average price of ₹623 per share, ahead of Ather’s upcoming quarterly results announcement.

Meanwhile, Pine Labs, a digital payments solutions provider, has experienced a slow start for its initial public offering (IPO), with only 13% of the total issue subscribed on the first day. Retail investor interest was noted, but participation from institutional and high-net-worth individuals remained low. The IPO has been valued at $2.9 billion, reflecting a markdown from earlier expectations.

Conclusion

Nykaa's impressive growth in the second quarter highlights the resilience of the fashion and beauty markets amid ongoing economic challenges. As the company continues to expand its offerings, it faces evolving dynamics in payment processing that may impact merchants across the sector. The IPO landscape remains cautious, with mixed responses from investors as firms navigate a changing market environment.