Purple Style Labs Limited ESOP expense accounted for half of losses

Purple Style Labs Limited recorded Rs 240.696 crore of employee stock option plan, or ESOP, expense across FY25 and FY26, equal to 50.8% of its combined Rs 473.782 crore reported losses after tax. The company classified the charge separately as exceptional, but it would have remained loss-making in both years without it.

How much did Purple Style Labs’ ESOP expense add to losses?

Purple Style Labs’ ESOP expense was Rs 122.768 crore in the year ended 31 March 2025 and Rs 117.928 crore in the year ended 31 March 2026, producing a two-year total of Rs 240.696 crore. The FY26 charge comprised Rs 118.505 crore of employee share-based payment expense, partly offset by a Rs 0.577 crore reversal on forfeiture of stock options.

Purple Style Labs reported a loss after tax of Rs 188.383 crore in FY25 and Rs 285.399 crore in FY26. ESOP expense therefore equalled 65.2% of the FY25 loss and 41.3% of the FY26 loss. The reported loss rose by Rs 97.016 crore year on year even as the ESOP charge declined by Rs 4.840 crore, showing that other costs also increased.

Purple Style Labs reported no employee share-based payment expense in FY24. The concentration in FY25 and FY26 followed adoption of the Employee Stock Option Scheme 2024 after shareholder approval on 17 June 2024; shareholders amended the scheme on 28 August 2025.

Did Purple Style Labs remain loss-making without the ESOP expense?

Purple Style Labs remained loss-making after excluding the exceptional ESOP expense in each year. Subtracting the charge from the reported loss produces an FY25 loss of Rs 65.615 crore and an FY26 loss of Rs 167.471 crore, or Rs 233.086 crore over the two years.

This is an analytical calculation, not a replacement for Purple Style Labs’ reported financial statements. The company recognises the fair value of stock options as an expense over the vesting period, with a corresponding increase in equity. Purple Style Labs reported no income-tax expense in FY25 or FY26, so the numerical adjustment to loss before tax is also the adjustment to loss after tax.

Purple Style Labs said the FY25 grant involved a large pool of options under a special incentive plan connected with strategic growth and future business plans. The company described the grant as non-recurring and significant, and presented the related share-based payment expense as an exceptional item to aid understanding of underlying operating performance. The separate classification does not remove the charge from the consolidated statement of profit and loss.

What else widened Purple Style Labs’ FY26 loss?

Purple Style Labs’ FY26 loss widened as finance costs and depreciation rose faster than revenue from operations. Revenue increased 13.9% to Rs 557.838 crore in FY26 from Rs 489.909 crore in FY25, as sales of goods rose to Rs 552.604 crore from Rs 483.391 crore; sales of services fell to Rs 5.234 crore from Rs 6.518 crore.

Finance costs rose to Rs 97.087 crore in FY26 from Rs 52.973 crore in FY25. Interest on lease liabilities accounted for Rs 49.272 crore of FY26 finance costs, while interest on non-convertible debentures accounted for Rs 23.489 crore. Depreciation and amortisation increased to Rs 100.749 crore from Rs 54.630 crore, mainly because depreciation on right-of-use assets rose to Rs 87.681 crore from Rs 40.222 crore.

Purchases of traded goods increased to Rs 349.827 crore in FY26 from Rs 302.587 crore in FY25. Employee benefits expense, excluding the exceptional ESOP line, rose to Rs 81.996 crore from Rs 66.208 crore, including Rs 76.220 crore of salaries, wages and bonuses. These recurring cost categories explain why the business still made a loss after the ESOP adjustment.

Purple Style Labs’ balance-sheet financing obligations also expanded in FY26. Lease liabilities stood at Rs 412.498 crore at 31 March 2026, versus Rs 174.390 crore a year earlier, and borrowings rose to Rs 371.402 crore from Rs 112.791 crore. During FY26, the company added Rs 330.057 crore of lease liabilities and recorded Rs 49.272 crore of interest on lease liabilities.

How does Purple Style Labs account for employee options?

Purple Style Labs measures stock-option fair value at the grant date and recognises it over the vesting period. The company uses the Black-Scholes option-pricing model, with inputs including risk-free interest rates, expected volatility, time to expiration and dividend yield.

Options under the ESOP Scheme 2024 vest after one year of service from their grant date and can be exercised within three years after vesting, subject to the scheme and grant letters. Purple Style Labs granted 4,332 options in FY25 and 668 in FY26. At 31 March 2026, the company had 5,000 outstanding options, of which 4,332 were exercisable and 668 were unvested.

The FY25 grants comprised 2,232 options dated 1 July 2024 and 2,100 dated 14 November 2024. Purple Style Labs granted 668 options on 1 July 2025, of which 23 lapsed and were granted during FY26. The filing states that options are equity-settled and that each option converts into one fully paid-up equity share, or 10 shares together with the benefit of the 999-for-one bonus issuance approved on 28 August 2025.

What ESOP expense has Purple Style Labs disclosed for the next year?

Purple Style Labs estimated Rs 9.136 crore of further share-based payment expense for the financial year after FY26. That amount is lower than the Rs 93.667 crore estimate disclosed at the end of FY25 for the following financial year, indicating that much of the earlier estimated charge was recognised in FY26.

The Rs 9.136 crore estimate applies to the expected accounting effect of outstanding share-based awards, not to total future employee compensation. Its recognition depends on vesting conditions and the treatment of options, including forfeitures or lapses. Purple Style Labs reported no options exercised in either FY25 or FY26.

Conclusion

Purple Style Labs’ Rs 240.696 crore ESOP expense was a major contributor to its Rs 473.782 crore combined FY25-FY26 reported loss, accounting for 50.8% of that total. The exceptional presentation identifies the impact of the special incentive grant, while the adjusted Rs 233.086 crore combined loss shows that operating performance was still loss-making without the charge.

The disclosed Rs 9.136 crore estimated share-based payment expense for the financial year after FY26 is the next ESOP measure to watch, following Rs 93.667 crore estimated at the end of FY25. Purple Style Labs’ disclosed plan links the original grant to strategic growth and future business plans, while future results will also depend on whether revenue growth offsets finance costs, lease-related depreciation and merchandise purchases.