The Rs 5,352-crore initial public offering (IPO) of FSN E-commerce Ventures, which owns eauty and wellness product online marketplace Nykaa, opened for subscription today (October 28) and will close on November 1.
According to NSE consolidated data, around 11.30 AM retail portion was oversubscribed the issue 1.3 times within hour of opening as the retail quota saw 66,28,752 bids as against allotted quota of 47,53,187 shares for this segment.
At 2.45 PM, Nykaa IPO was subscribed 0.69 times with the retail portion fully booked 2.60 times, according to BSE data. The portion reserved for employees has been subscribed 0.40 times, non institutional investors (NIIs) 0.34x and QIBs 0.24times.
The Price Band of the offer has been fixed at Rs. 1,085 to Rs. 1,125 per equity share. Bids can be made for a minimum of 12 equity shares and in multiples of 12 equity shares thereafter. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).
The Nykaa IPO comprises of a fresh issue of equity shares worth Rs 630 crore and an offer for sale (OFS) of 41,972,660 equity shares by promoter and existing shareholders.
Promoter Sanjay Nayar Family Trust will sell up to 48 lakh equity shares through OFS. Investors TPG Growth IV SF Pte Ltd will offload 54.21 lakh equity shares while Lighthouse India Fund III will dilute 48.44 lakh equity shares respectively. Yogesh Agencies & Investments Pvt Ltd, will sell 25.38 lakh equity shares and JM Financial and Investment Consultancy Services will offload 9.14 lakh equity shares.
FSN E-Commerce Ventures, founded in 2012 by Falguni Nayar – a former investment banker turned entrepreneur, is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers.
Beauty and personal care market in India
The Beauty and personal care market in India has expanded by 13 percent CAGR to reach a size of Rs. 1.3 trillion in 2019. The market fell to Rs. 1.1 trillion in 2020 as a result of reduced spending during the COVID-19 wave, it is projected to grow at 12 person CAGR over 2020-25 to reach Rs. 2trillion in 2025. The Indian fashion market is estimated to grow to approximately Rs. 8.7 trillion by 2025 from Rs. 3.8 trillion in 2020,
Brokerages verdict
Brokerages on Nykaa IPO |
Motilal Oswal: We recommend Subscribe. Investors with high risk appetite can Subscribe for Listing Gains given fancy for unique and first of its kind listing in the e-commerce space.
Swastika: The valuation of the IPO is pretty high; however, eyeing the higher valuations of other unicorns we may expect some listing gain. Thus, we assign a “SUBSCRIBE” rating to the IPO only for listing gains.
Arihant Capital: We recommend investors to subscribe for the listing gain and one can also buy at lower levels.
Canara Bank Securities: Overall, the company has a target addressable market of $152 billion (Beauty Product at $28 billion/fashion at $124 billion) that has a lower internet penetration (8 percent in Beauty Products and 10 percent in Fashion). As the brand resonates well with the millennials, who keep updating trends, we believe that the company has a potential to grow in lifestyle E-commerce space with its scalable business model. We recommend a SUBSCRIBE for listing gains and long term for the issue.
K R Choksey: We expect Nykaa to benefit from prevailing tailwind in the industry, its strong technology led platform, strong relationship with global brands, diverse portfolio of own brands, content first approach, Omni channel presence, loyal customer base, planned expansion in Middle East and Europe, growth in Tier II & III cities and strong management team. Considering the prevailing opportunities, investors should look to invest in Nykaa’s IPO for listing gains as well as long term opportunity it presents.
B.P. Equities: Nykaa has gained a significant prominence not only as a lifestyle retail platform but also as a leading lifestyle brand and influencer. Nykaa has successfully redefined the art of Retailing of Beauty and Personal Care in India. The business model is rooted in its value proposition, separating it from the otherwise predominantly transactional based e-commerce industry. At upper end of the price band, the issue is valued at 21.81x EV/ Sales on FY21 financials. There is an underlying risk for high valuations but considering factors such as increasing PAT, positive cash flows, huge growth capabilities and confidence in the company’s management, we recommend “SUBSCRIBE” rating on this issue.
Choice Broking: There are no peers in the listed space that are engaged in the business similar to that of FSN. At higher price band of Rs. 1,125, the company is demanding an EV/TTM Sales multiple of 21.6x, which seems to be reasonably priced. Considering the growth potential in the beauty and personal space and also the lower e-commerce penetration, we feel that FSN has a huge untapped market. Thus, we assign a “SUBSCRIBE” rating for the issue.
