D2C beauty brand SUGAR Cosmetics has raised ₹144.47 crore in a fresh equity round led by A91 Partners, marking a drastic reduction in valuation from its peak levels three years ago.
- Raised ₹144.47 Cr at ₹550-600 Cr valuation, down ~80% from 2024.
- Fiscal 2025 saw doubled net losses and 20% revenue decline.
- Offline expansion hampered profitability; 30-40% stores closed.
What happened
SUGAR Cosmetics completed a fresh equity funding round with venture capital firm A91 Partners investing ₹144.47 crore ($15.3 million) through issuance of Series D7 compulsorily convertible preference shares (CCPS). The post-money valuation for this round is estimated between ₹550 crore and ₹600 crore, signaling a significant drop of nearly 80% from the ₹2,600-2,700 crore valuation in its last round during November 2024. This latest round was formalized in a board meeting dated September 1, 2026.
The company’s financial filings also revealed considerable operational setbacks in fiscal year 2025. SUGAR’s net losses surged from ₹68.4 crore in FY24 to ₹135 crore in FY25, while revenues declined roughly 20% from ₹505.1 crore to ₹404.4 crore. EBITDA losses more than doubled to ₹116 crore in the same period. These challenges coincided with a peak valuation of about ₹3,000 crore in 2022 and earlier financing rounds totaling around $90 million from investors including Elevation Capital and Anicut Capital.
Why it matters
The valuation markdown highlights the financial pressure facing SUGAR Cosmetics amid India’s maturing D2C beauty market. The aggressive offline retail expansion strategy led to substantial losses, prompting the company to shutter 30-40% of its physical stores as indicated by market reports. This signals a potential recalibration of growth tactics in a competitive landscape featuring peers like Nykaa and Mamaearth.
The broader D2C ecosystem in India is rapidly evolving, with beauty and personal care brands drawing over $1.1 billion in funding since 2015. SUGAR’s sizeable valuation cut serves as a cautionary marker reflecting intensified operational scrutiny and the challenge of balancing expansion with sustainable profitability. The shift also underscores the increased focus on scalable and digitally-led business models within the sector.
What to watch next
Investors and industry watchers will closely monitor how SUGAR Cosmetics adjusts its business strategy post-funding, particularly concerning its offline store footprint and cost management. The company has yet to report FY26 financials, which will be critical to assess whether the recent capital infusion can halt the deteriorating profitability trend and fuel a recovery.
Additionally, the competitive dynamics of India’s D2C beauty segment, planned product innovations, and channel mix will influence SUGAR’s roadmap. Given the expected growth of D2C to comprise over two-thirds of ecommerce GMV in India by 2031, SUGAR’s ability to regain investor confidence and market share will be a key barometer of sector health.