In its latest employee stock ownership plan (ESOP) move, beauty and fashion ecommerce leader Nykaa, operated by FSN E-Commerce Ventures Ltd., has issued 17,010 equity shares to its workforce, valued at approximately Rs 32.3 lakh. This is the second such allotment by Nykaa in 2025, following the company’s consistent strategy of incentivising talent through stock-based compensation. With these shares valued at Rs 189.55 apiece, as per the BSE’s closing rate on Thursday, this initiative aligns with Nykaa’s broader approach to enhance employee ownership and boost long-term retention.
The company has already handed out over 2.1 lakh shares this calendar year. In March alone, Nykaa granted 1,01,350 options, while in February, it issued 90,500 shares. The January round saw more than 56,000 options exercised. This pace builds on its fiscal 2024 performance, where it issued nearly 4.8 lakh ESOPs in the December quarter.
Nykaa stated in its filing that the new shares will rank equally with existing shares in every respect. Moreover, it reinforced that stock options remain critical to attracting and retaining top industry talent, especially in India’s dynamic beauty and personal care sector.
While rolling out equity incentives, Nykaa also continues to impress on the financial front. The Mumbai-based omnichannel retailer projected a consolidated revenue growth in the low-to-mid-20% range for Q4 FY25, with a 30% growth in gross merchandise value (GMV). It reported a 51% jump in Q3 net profit, reaching Rs 26.4 crore on revenue of Rs 2,267.2 crore. These results place Nykaa well above the industry average and highlight its aggressive growth trajectory.
This latest ESOP issue reiterates Nykaa’s strategy of aligning employee interests with its strong growth path in India’s evolving ecommerce space.
1. Inside Nykaa: How the Beauty Giant Works
1.1. The Operating and Revenue Model
Nykaa runs on a dual-channel model, blending ecommerce with offline retail. It operates an omnichannel strategy through its website, mobile app, and a rapidly growing physical retail presence. Nykaa’s platform hosts over 2,000 brands across categories including skincare, makeup, wellness, personal care, and fashion.
Revenue generation stems primarily from product sales on its ecommerce and retail platforms. In addition, the company earns margins from private-label brands, such as Nykaa Cosmetics and Kay Beauty, and gains from partnerships, advertisements, and delivery fees.
1.2. The Funding and Founders
Founded in 2012 by Falguni Nayar, a former investment banker at Kotak Mahindra, Nykaa began as a pure beauty ecommerce player. Falguni leveraged her extensive finance background to raise funding and grow Nykaa into a leading beauty and lifestyle platform.
Nykaa became a unicorn in 2020 and went public in November 2021, listing on the Indian stock exchanges at a valuation of nearly $13 billion. Its IPO was a milestone in India’s ecommerce space.
1.3. Products and Services
Nykaa offers beauty, fashion, and wellness products, along with expert content, beauty advice, tutorials, and personalized recommendations. It also runs sub-brands such as Nykaa Fashion, Nykaa Luxe, and Superstore by Nykaa, focusing on B2B supply and fashion curation.
2. Nykaa Shares ESOP Schemes: What’s New in April 2025
2.1. The Latest Allotment
On April 17, 2025, Nykaa allotted 17,010 equity shares under its employee stock option plans. Valued at Rs 189.55 per share, the issuance totals Rs 32.3 lakh. The shares were allotted under various employee stock schemes, aimed at rewarding and retaining key talent.
This marks the company’s second ESOP action of the year. It follows substantial ESOP exercises in previous months, including over 1.01 lakh shares in March, 90,500 in February, and 56,000+ in January.
2.2. Strategic Intent and ESOP Philosophy
The move is part of Nykaa’s larger employee-centric strategy. The board stated that these shares will rank pari passu with existing equity shares. Nykaa believes that giving equity to employees strengthens alignment with long-term business goals.
2.3. Historical Trends in ESOP Grants
Nykaa issued nearly 4.8 lakh ESOP shares in the December quarter of FY24. This regular cadence reflects a well-structured incentive policy, distinguishing Nykaa from several competitors in India’s online retail ecosystem.
3. Strong Financial Signals from Nykaa
3.1. Performance in FY25
While rewarding employees, Nykaa has also been showing steady financial progress. It forecasted Q4 FY25 revenue growth in the low-to-mid-20% range. Its gross merchandise value is set to grow by nearly 30%, exceeding industry expectations.
3.2. Q3 FY25 Results
The company posted a 51% increase in net profit in Q3 FY25. Its profit rose to Rs 26.4 crore, backed by revenue of Rs 2,267.2 crore. This robust performance boosts investor confidence and reaffirms Nykaa’s positioning in India’s retail space.
4. Trends and Talent in India’s Beauty Retail Sector
4.1. The Competitive Talent Landscape
India’s beauty and fashion ecommerce space is witnessing rising demand for skilled talent. With increasing market saturation and customer expectations, startups must offer compelling reasons for employees to stay. Nykaa’s consistent ESOP grants show its foresight in navigating this challenge.
4.2. Role of Equity in Talent Retention
Stock options give employees a financial stake in company growth. This not only motivates better performance but also fosters loyalty. With ESOP schemes, Nykaa joins the league of future-forward startups prioritizing sustainable growth and workforce equity.
5. Learning for Startups and Entrepreneurs
5.1. Equity Can Be a Gamechanger
Stock-based rewards can attract top-tier professionals, particularly in competitive sectors like fashion tech and beauty ecommerce. Equity enables a sense of ownership that transcends salaries.
5.2. Consistency Matters in Talent Retention
Offering ESOPs consistently, as Nykaa does, enhances the employer brand. It helps retain institutional knowledge and sustains innovation.
5.3. Financial Growth Strengthens Incentive Value
When a company shows strong financial results, its ESOPs hold more value. This alignment between incentives and business metrics is crucial.
The Startups News: Your Go-To for Startup Financial Updates
When it comes to tracking the most impactful financial decisions in the Indian startup ecosystem, The Startups News stands out as a dedicated platform. For companies like Nykaa, where employee stock options tie into broader talent and growth strategies, our platform offers unmatched coverage. We simplify startup equity updates, business funding news, and emerging venture capital trends to keep startup leaders informed and ahead of the curve.
