Shares of FSN E-Commerce Ventures have staged a sharp comeback, rallying 64% over the past year to emerge as the top performer in the internet space amid signs of an operational turnaround. However, the valuations of Nykaa’s parent company raise concerns about whether the current price offers a favourable risk-to-reward proposition and if the stock has sufficient headroom for further upside.

Nykaa’s high double-digit returns have come at a time when markets have struggled due to external factors like US tariffs, geopolitical tensions, and the Fed’s interest rate status quo against the expectations of a rate cut. Among the internal factors, weak domestic earnings and premium valuations have weighed on markets.

Sunny Agrawal, Head, Retail Fundamental Desk at SBI Securities, decodes the new-found enthusiasm for FSN E-Commerce shares among the investors. According to him, Nykaa has been delivering robust growth in operating profit for the last five quarters on the back of robust EBIT margin expansion in both the BPC and fashion verticals.

The company delivered a stellar set of numbers in Q3FY26, reporting a 142% jump in the consolidated net profit at Rs 63 crore, compared with Rs 26 crore in the year-ago period. The Nykaa operator’s revenue from operations stood at Rs 2,873 crore in Q3 FY26, up 27% from Rs 2,267 crore in the corresponding period of the previous financial year.

The company has reported record high GMV (Gross Merchandise Value) and EBITDA margins, while the balance sheet efficiency has been improving with working capital days dropping to 30, Agrawal noted. The RoCE has improved to 19% with all round improvement in financial and operating metrics over the last one year, leading to the share price recovery, according to him.

Also read | Nykaa Q3 Results: Profit skyrockets 142% YoY to Rs 63 crore; revenue climbs 27%

Nykaa’s share price journey so far

Nykaa’s Rs 5,350 crore IPO was launched in October 2021 with the price band set at Rs 1,085-Rs 1,125. The stock debuted on a strong footing at a price of Rs 2,018, implying a 79% listing premium. It went on to hit the lifetime high of Rs 2,089 on January 22, 2026.

Subsequently, the correction set-in, leading the stock to Rs 1,145 before a 5:1 bonus issue adjusted its price to Rs 167 on November 10, 2022.

The downward journey continued with Nykaa shares hitting their all-time low of Rs 114.

The past year has been quite eventful with the stock’s strong rally at play, but 2026 has been a different ball game. The 2026 price remains flat over the previous year, though the stock hit its 52-week high of Rs 286 this month.

Nykaa versus internet peers

Apart from Nykaa, only five other scrips in the 21-stock Nifty India Internet index have outperformed Nifty’s 13% one-year returns. One 97 Communications (Paytm), IIFL Capital Services, Motilal Oswal Financial Services (MOFSL), CarTrade Tech, Le Travenues Technology and Nazara Technologies have returns superior to the headline index in the same period.

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