Nykaa reported a strong Q1 FY27 performance with net profit rising more than three times to ₹80 crore, revenue increasing 29.1% to ₹2,782 crore, and EBITDA improving significantly. Despite the strong earnings, the stock fell over 3% due to profit booking under the “sell-on-news” trend. Most leading brokerages continue to maintain a positive long-term outlook on the stock.
Investors often expect strong quarterly earnings to push a stock higher. However, Nykaa (FSN E-Commerce Ventures Ltd.) delivered an unusual market reaction after announcing impressive first-quarter FY27 results. While the company reported a sharp rise in profit and revenue, its shares declined by more than 3% during trading on August 5 as investors booked profits after the earnings announcement.
The decline surprised many retail investors, especially because the company’s financial performance exceeded market expectations in several key areas.
- Nykaa Reports Strong Q1 FY27 Financial Results
- Why Did Nykaa Shares Fall Despite Strong Earnings?
- Offline Expansion Continues to Support Growth
- Aminu Wellness Acquisition Strengthens Premium Skincare Portfolio
- What Are Analysts Saying About Nykaa Stock?
- Should Investors Consider Buying Nykaa Shares?
Nykaa Reports Strong Q1 FY27 Financial Results
Nykaa delivered robust growth across revenue, profitability, and operating margins during the June quarter.
| Financial Metric | Q1 FY27 | Growth |
|---|---|---|
| Revenue | ₹2,782 crore | Up 29.1% YoY |
| Net Profit | ₹80 crore | More than 3x YoY |
| EBITDA | ₹236 crore | Up around 68% YoY |
| EBITDA Margin | 8.5% | Improved from 6.5% |
The company’s net profit increased significantly from ₹24.5 crore in the corresponding quarter last year, reflecting stronger operational efficiency and improving margins.
Why Did Nykaa Shares Fall Despite Strong Earnings?
The decline was largely driven by the “sell-on-news” phenomenon, a common trend in stock markets where investors book profits after a much-anticipated event.
Nykaa’s stock had already gained ahead of the quarterly results as investors expected a strong performance. Once the company announced its earnings, many short-term traders chose to lock in profits, leading to selling pressure despite fundamentally positive numbers.
This type of price movement does not necessarily indicate weakness in the company’s business performance.
Offline Expansion Continues to Support Growth
Nykaa continues to strengthen its omnichannel retail strategy by expanding beyond online sales.
During the quarter, the company opened 11 new retail outlets, taking its total network to 324 stores across more than 100 cities. The expansion is expected to improve customer reach, especially in Tier-2 and Tier-3 markets.
The company’s Beauty segment also maintained strong momentum, with Gross Merchandise Value (GMV) growing 28% year-on-year to ₹4,105 crore.
Meanwhile, Nykaa’s portfolio of 13 in-house consumer brands recorded an impressive 43% growth during the quarter.
Aminu Wellness Acquisition Strengthens Premium Skincare Portfolio
Nykaa also expanded its premium beauty business by acquiring a 51% stake in Aminu Wellness for ₹32 crore.
The premium skincare brand generated revenue of ₹19.4 crore in the previous financial year, and the acquisition is expected to strengthen Nykaa’s position in India’s fast-growing premium skincare market.
What Are Analysts Saying About Nykaa Stock?
Despite the short-term decline, several leading brokerage firms remain optimistic about Nykaa’s long-term growth potential.
Nomura has maintained a Buy rating with a target price of ₹411, citing the company’s expanding offline presence and long-term growth opportunities.
Jefferies has assigned a target of ₹400, highlighting continued customer growth in the beauty segment.
HSBC has reiterated its Buy recommendation with a target price of ₹380, while CLSA has given an Outperform rating with a target of ₹376, supported by strong growth in the fashion business.
Among 26 analysts tracking the stock, 14 recommend Buy, six suggest Hold, and six have a Sell recommendation.
Should Investors Consider Buying Nykaa Shares?
While short-term volatility remains possible following the recent correction, most brokerage firms continue to view Nykaa as a long-term growth story. The company’s improving profitability, expanding offline footprint, premium brand acquisitions, and steady growth across beauty and fashion segments remain key positives.
However, investors should evaluate their financial goals, risk tolerance, and investment horizon before making any investment decision.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Investors should consult a qualified financial advisor before making any investment decisions.