Nykaa Shares Dip Nearly 5% Despite Strong Q4 Revenue Growth

Shares of beauty and fashion retailer Nykaa fell nearly 5% in early trading, even as the company reported a strong Q4 performance. Investors appeared to focus more on valuation and forward guidance than on the latest quarterly results.

According to Economic Times, FSN E-commerce, Nykaa’s parent company, saw its shares drop by up to 4.77% following a weak opening on Monday. By 2:30 pm, the stock was down 4.08% at ₹194.95, while the Sensex had fallen by only 0.21%. The share opened at ₹199, 2% below Friday’s close of ₹203.26 on the BSE.

In its earnings report, Nykaa revealed a 45% rise in consolidated revenue for the quarter ended March, driven by high demand in both the beauty and fashion segments. Gross merchandise value also climbed sharply, and net profit turned positive after a loss in the same quarter last year. Yet, Nykaa’s share fall suggests traders chose to lock in gains rather than cheer the figures.

Guidance and Valuation Concerns Weighed on Shares

Management issued cautious comments about the upcoming quarter, warning that higher marketing and logistics expenses would continue to pressure margins. At the same time, Nykaa’s shares had already surged strongly over the past year, leaving the stock trading at a premium to peers. These factors combined to temper enthusiasm, resulting in a nearly 5% drop despite the encouraging Nykaa’s performance.

However, on a quarter-on-quarter basis, Nykaa’s Q4 profits dropped by 29.3%, down from ₹26.9 crore in the previous quarter.

The beauty segment, which makes up over 90% of the company’s total revenue, recorded a 24.7% year-on-year increase, reaching ₹1,895 crore, up from ₹1,519 crore a year ago. Meanwhile, the fashion division posted slower growth, rising 11% to ₹161 crore from ₹145 crore, with gross merchandise value (GMV) improving by 18% YoY.
Over the full financial year, Nykaa reported a consolidated GMV of ₹15,604 crore, reflecting a 25% increase from the prior year.

What Investors Should Watch Next

The muted response in Nykaa’s stock market highlights how closely investors now scrutinize future outlooks. While the beauty segment continues to be the company’s main profit driver, the fashion business will need to demonstrate similar efficiency. New private-label launches and strategic partnerships are on the horizon, and their success or failure could sway sentiment in the next quarter.

Brokerages house Nuvama said in a note on Monday, “While BPC segment continues to deliver healthy growth with better profitability, revival in fashion business remains a key monitorable, given the heightened competitive intensity across the industry.”

Nykaa’s Share Movement

Even when a quarterly update beats expectations, conservative guidance can pull shares lower. Stocks that run up quickly often need fresh catalysts—be it margin improvement or a successful product launch—to maintain momentum. In Nykaa’s case, demonstrating sustainable profitability alongside revenue growth will be crucial in restoring investor confidence.

Overall, Nykaa’s strong Q4 performance underscores the company’s ability to scale, but the recent slide reminds us that markets reward both growth and disciplined cost management. As Nykaa reports again, all eyes will be on its next earnings release to see if it can deliver on both fronts.