Startup Deep Dive : Nykaa — profitable at IPO, flat five years later

Nykaa’s share price today sits roughly where it stood on its opening day in November 2021 — yet in the two financial years since, revenue has grown from Rs 6,386 crore to Rs 10,022 crore and net profit has gone from Rs 40 crore to Rs 204 crore. A company that is visibly bigger and meaningfully more profitable has not been rewarded with a correspondingly bigger market value.

That gap is the real story of Nykaa. It was the rare Indian startup that reached the public market already profitable, built by a 49-year-old investment banker who had never run a company before. It survived a chaotic first year, a pandemic that nearly broke it before remaking it, and a 2022 governance controversy that cost it a chief financial officer and a chunk of investor goodwill. What is left in 2026 is a business that has quietly compounded revenue for a decade while the market decided, more than once, that it did not believe the story.

Quick facts

What they do

Nykaa sells beauty and personal care products, and separately fashion, to Indian consumers across a website, an app and a network of physical stores. The beauty business is the core: skincare, make-up, haircare and wellness products from international and Indian brands, plus Nykaa’s own labels, sold mostly on a buy-and-resell basis so the company controls what it stocks and can guarantee it is not counterfeit. Nykaa Fashion runs alongside it as a separate marketplace for apparel and accessories. A third, smaller arm, Superstore by Nykaa, sells beauty products wholesale to neighbourhood retailers who cannot get the same catalogue from brand distributors directly.

The origin

Falguni Nayar spent close to two decades as an investment banker at Kotak Mahindra Capital, rising to managing director before she left in March 2012, at age 49, to start Nykaa with about $2 million of her own money, as widely reported in profiles of her career (Forbes India, 2021). Her insight was not that India lacked e-commerce; it was that India’s beauty retail was fragmented, under-stocked and full of counterfeit risk, and that an unglamorous but disciplined inventory business — buying real stock from real brands and guaranteeing authenticity — would beat a lighter-touch marketplace on trust alone. That bet mattered more than it might sound: a year after Nykaa’s founding, India’s 2018 foreign investment rules (Press Note 2) barred foreign capital from inventory-led e-commerce while permitting it for pure marketplaces, which meant Amazon and Flipkart could not simply copy Nykaa’s model in beauty even if they wanted to (Khaitan & Co, on Press Note 2 of 2018).

The struggle years

The first eighteen months were closer to chaos than strategy. Early profiles of the company describe a founding team that turned over within a year, a website that kept crashing, and an order-management process so manual that it broke down once volumes crossed roughly a hundred orders a day, with Nayar and her daughter packing boxes at the warehouse themselves (Forbes India, 2021). The company survived that period on Nayar’s own capital and her network from her banking years, which is how it landed early distribution deals with brands such as Estee Lauder and MAC in a market where a first-time, unfunded founder would ordinarily have struggled to get a meeting.

A second, longer-running struggle sits inside the numbers rather than the founding lore: Nykaa Fashion. Launched in 2018 as a marketplace bolt-on to the beauty business, it burned cash for years and was flagged repeatedly by analysts as a drag on the group’s path to consolidated profitability, with Nykaa Fashion’s own leadership telling investors on an earnings call that the vertical was still working toward its “peak loss” as late as 2023 before improvement (Inc42, 2023). A third setback was reputational rather than financial: in November 2022, a bonus share issue timed to the exact week that pre-IPO investors’ one-year lock-in expired drew accusations of an attempt to blunt a potential sell-off, and the company’s chief financial officer, Arvind Agarwal, resigned within days of the controversy breaking, officially to “pursue other opportunities” (Business Standard, November 2022).

The turning point

The clearest inflection point in Nykaa’s numbers is the year before its IPO. In FY20 (year ended March 2020), the company posted a restated net loss of Rs 16.34 crore on revenue of Rs 1,777.8 crore. A year later, in FY21, revenue rose 38.1% to Rs 2,452.6 crore and the company swung to a net profit of Rs 61.94 crore (Inc42, 2021, citing the company’s IPO filings). That turnaround — helped by a pandemic-driven shift of beauty spending online, and by the assortment strategy Nayar had built through the 2010s — is what let Nykaa go public in November 2021 as one of the few Indian internet companies to list already profitable on an operating basis, a point its bankers and the financial press made repeatedly at the time (Business Standard, August 2021).

The money behind it

Nykaa raised comparatively little venture capital by Indian startup standards before its IPO — reported at roughly $60 million across rounds between 2014 and 2019, according to funding trackers compiling its filings — a reflection of the founder funding most of the early growth herself. TPG Growth invested in the company from 2019 and had become one of its largest institutional shareholders by the time of the IPO, later selling part of its stake via block deals after listing (Business Standard, November 2022). Steadview Capital, an existing investor, put in a further Rs 100 crore in 2020 (Business Standard, 2020). Sunil Kant Munjal of the Hero Group backed the company early and remained a pre-IPO shareholder through to listing (Business Standard, 2021). The IPO itself, on 10 November 2021, raised Rs 5,351.92 crore in total — a fresh issue of Rs 630 crore plus an offer for sale of Rs 4,721.92 crore by existing investors — against bids for 81.78 times the shares on offer, and the stock opened 80% above its Rs 1,125 issue price, taking the company’s market capitalisation past Rs 1 lakh crore (about $13.5 billion then) on day one (Business Standard, November 2021).

How it makes money

Beauty is an inventory business: Nykaa buys stock from brands at wholesale prices and sells it at retail, earning the margin in between and taking on the inventory risk itself. That is a deliberate, capital-heavier choice than the marketplace model Amazon and Flipkart run, and it is what let Nykaa promise (and police) authenticity in a category where counterfeits are a real problem. Reporting on the company’s cost structure has put gross margin on third-party beauty brands at around 44%, rising to an estimated 60-70% on Nykaa’s own labels such as Kay Beauty and Nykaa Cosmetics, which is why the company keeps investing in owned brands even though they are a minority of sales (Inc42, on Nykaa’s inventory model). Fashion runs the opposite way: it is a marketplace, so Nykaa does not hold apparel inventory and instead earns a commission from sellers on each sale, alongside advertising and fulfilment fees, at rates that industry reporting places roughly in the 15-30% range of selling price depending on category. The part outsiders usually miss is that these are two structurally different margin profiles bolted into one income statement — beauty has been solidly profitable for years, while fashion has had to fund its own growth out of the group’s overall cash generation.

The numbers

The four-year run shows steady, unspectacular improvement rather than a hockey stick: revenue has roughly doubled and net profit has moved from barely positive to a comfortable, if still thin, margin.

FY26 (year ended March 2026) revenue of Rs 10,022 crore crossed the $1 billion mark at the prevailing exchange rate, up 26.1% on FY25, while net profit of Rs 204 crore was up roughly 183% on FY25’s Rs 72 crore (Business Standard/Whalesbook, May 2026, citing the company’s Q4 and full-year results). EBITDA margin, the more forgiving measure of core profitability, expanded to 7.5% in FY26 from 6.0% in FY25, still a thin margin for a company doing over Rs 10,000 crore of revenue, which says something about how competitive Indian beauty and fashion retail has become.

Where the money comes from

Beauty is not just the older business, it is the overwhelming majority of it. In FY25, the beauty vertical did about Rs 11,800 crore of gross merchandise value against Rs 3,800 crore for fashion, out of total group GMV of about Rs 15,600 crore — a roughly 76:24 split (Entrepreneur India and Indian Retailer, both reporting the company’s FY25 disclosures). The surprise is how small the eB2B wholesale business still is in revenue terms relative to how strategically it is talked about: Superstore by Nykaa served about 280,000 retailers across 1,100 cities in FY25 but generated only around Rs 941 crore of GMV, under 8% of the beauty vertical’s own GMV — a distribution and data play more than a near-term profit centre. Physical retail has become a meaningful third leg rather than a sideline: the store count grew from about 250 stores across 82 cities in mid-2025 to 313 stores by the end of March 2026, after the single largest quarterly addition in the company’s history, helped by newly integrated Kiehl’s outlets (Storyboard18, April 2026).

The risks

The first risk is structural: Nykaa’s margins are still thin for its size. An EBITDA margin of 7.5% in FY26, even after nine years of scale and brand-building, means a mild discounting war or a rise in customer acquisition costs can compress profit quickly; there is not much cushion built up. Second, the group’s consolidated profit still leans on beauty to carry fashion. Nykaa Fashion was described by its own leadership as only approaching its “peak loss” in 2023, and analysts have repeatedly flagged the segment’s cash burn as the main variable standing between Nykaa and a materially higher consolidated margin (Inc42, 2023). Third, competitive intensity in beauty retail has risen sharply since Nykaa’s IPO, most visibly with the entry of Reliance Retail’s well-funded Tira chain alongside Amazon and Flipkart’s own beauty pushes, all competing for the same discovery-driven, discount-sensitive shopper Nykaa built its early customer base on.

The takeaway

Nykaa’s most useful lesson is not about beauty or e-commerce specifically; it is about what patience looks like on a stock chart versus an income statement. The company’s fundamentals — revenue, profit, EBITDA margin, store count — have moved in one direction, up, in every one of the last four years, including through a governance scandal that cost it a CFO and a stock crash that took the shares more than 50% below their issue price. The market’s opinion of that same business has swung far more violently than the business itself has, from a euphoric 82% listing-day pop to a multi-year slide and back to roughly where it started. Building a durable, profitable company and being rewarded for it on a quarterly basis are two different jobs, and Nykaa’s history is a reasonably clean demonstration of the gap between them.

Frequently asked questions

Who founded Nykaa and when?

Falguni Nayar, a former investment banker at Kotak Mahindra Capital, founded Nykaa in April 2012 at age 49, with commercial operations beginning in 2013 (Wikipedia; Forbes India, 2021).

Is Nykaa profitable?

Yes. Its parent, FSN E-Commerce Ventures, reported a consolidated net profit of Rs 204 crore on revenue of Rs 10,022 crore for FY26 (year ended March 2026), continuing a run of annual profits that stretches back to FY21, the year before its IPO (Business Standard/Whalesbook, May 2026; Inc42, 2021).

What is the difference between Nykaa’s beauty and fashion businesses?

Beauty is run as an inventory-led retail model, where Nykaa buys stock and sells it at a retail margin, while Nykaa Fashion is a commission-based marketplace where third-party sellers list products and Nykaa does not hold the inventory (Inc42, on Nykaa’s inventory model).

When did Nykaa go public, and what happened to its share price afterward?

Nykaa listed on the NSE and BSE on 10 November 2021, opening about 80% above its Rs 1,125 issue price. The stock later fell over 50% below its issue price through 2022 amid a broader new-age tech stock sell-off and a bonus-share controversy, before recovering; its market value in September 2026 is close to, though slightly below, the roughly Rs 1 lakh crore it touched on listing day (Business Standard, November 2021 and December 2022).

What was the Nykaa bonus share controversy?

In November 2022, Nykaa announced a 5:1 bonus share issue with a record date immediately after the one-year lock-in on pre-IPO investors’ shares expired, which drew criticism that the timing was designed to discourage a sell-off; the company’s CFO resigned within days, though he cited other career opportunities rather than the controversy (Business Standard, November 2022).

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Business Standard, “Nykaa lists at 79% premium to issue price; market cap crosses Rs 1 trillion”, November 2021
• Business Standard, “Nykaa IPO: first profitable unicorn led by women to tap public markets”, August 2021
• Inc42, “[What The Financials] IPO-Bound Nykaa Turns Profitable As Order Value Shoots Up In FY21”, 2021
• Forbes India, “Entrepreneur at 49, billionaire at 58: How Falguni Nayar built success with Nykaa”, 2021
• Wikipedia, “Nykaa”, accessed September 2026
• Khaitan & Co, “FDI In E-Commerce Activities Press Note No 2”, on the 2018 foreign investment rules
• Entrackr, “Nykaa posts Rs 6,386 Cr revenue and Rs 40 Cr PAT in FY24”, May 2024
• Screener.in, FSN E-Commerce Ventures Ltd consolidated financials, accessed September 2026
• Business Standard, “Nykaa Q4 results: Profit jumps 193% to Rs 20 crore, revenue rises 24%”, May 2025
• Whalesbook / Business Standard, Nykaa FY26 results coverage (revenue Rs 10,022 crore, net profit Rs 203.94 crore), May 2026
• Storyboard18, “Nykaa sees GMV growth in high twenties in Q4 FY26”, April 2026
• Entrepreneur India, “Nykaa’s Beauty Vertical Delivers INR 11,800 Crore GMV in FY25”, 2025
• Indian Retailer, “Nykaa Closes FY25 with Rs 15,600 Cr GMV, Expands Omnichannel Footprint with 250 Stores”, 2025
• Business Standard, “Nykaa shares slump as one-year lock-up period of pre-IPO investors ends”, November 2022
• Business Standard, “Fashion & beauty platform Nykaa announces CFO Arvind Agarwal’s resignation”, November 2022
• BusinessToday, “Nykaa shares hit all-time low; down over 56% in 2022 so far”, December 2022
• Inc42, “Losing Sheen? Decoding Nykaa’s Volatile 2023 & Calling Out The Risks Ahead”, 2023
• Inc42, “Inside Nykaa’s Inventory Model: Where The Margin Comes From”
• Business Standard, “TPG Capital to sell Nykaa shares worth Rs 1,000 cr via block deal”, November 2022
• Business Standard, coverage of Steadview Capital’s Rs 100 crore investment in Nykaa, 2020
• Stockanalysis.com, FSN E-Commerce Ventures market capitalisation, September 2026

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