The initial share sale of FSN E-Commerce Ventures, which runs an online marketplace for beauty and wellness products Nykaa, is set to open for public subscription on October 28 and will close on November 1. Anchor book of up to Rs 2,340 crore will open for a day on October 27.
The Nykaa IPO comprises of a fresh issue of equity shares worth Rs 630 crore and an offer for sale (OFS) of 4.19 crore shares by promoters and existing shareholders.
The offer includes a reservation of up to 250,000 equity shares for purchase by eligible employees.
Price band
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.
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.
Founder Falguni Nayar and her family will continue to own a majority stake even after the IPO.
Objectives of the issue
Capital expenditure and investment in certain subsidiaries.
Repayment or prepayment of certain borrowings availed by the company and its subsidiaries.
Expenditure to acquire and retain customers by enhancing the visibility and awareness of brands.
General corporate purposes.
Nykaa financials
For the quarter ended June 30, 2021, the company had reported a net profit of Rs 3.5 crore on revenues of Rs 822 crore and for the full year ending March 31, 2021, its net profit stood at Rs 62 crore on revenues of Rs 2,453 crore.
Nykaa reported a net profit of Rs 61.94 crore for FY21 compared to a net loss of Rs 16.34 crore in FY20. Its revenue from operations jumped to Rs 2,441crore in FY21 from Rs 1,768 crore in FY20.
It clocked nearly 57 per cent CAGR in gross merchandise value (GMV) from FY19-21 and more than 48 per cent CAGR in revenue terms from FY19-21. The company is one of the leading influential lifestyle platforms in India with over 12.6 million followers across leading social media platforms as of March 2021.
Kotak Mahindra Capital, BofA Securities, ICICI Securities, Citibank, Morgan Stanley and JM Financial are book-running lead managers of the issue. Founder Falguni Nayar and her family will continue to own a majority stake after the IPO.
Nykaa backed by PE firm, Falguni Nayar
FSN E-Commerce Ventures Ltd. (Nykaa) is a consumer technology platform, backed by private equity firm TPG and promoted by Falguni Nayar. It delivers a content-led, lifestyle retail experience to consumers. The company has a diverse portfolio of beauty, personal care and fashion products, including their own brand products manufactured by them.
Nykaa operates under 2 major business verticals namely Nykaa (beauty and personal care products) and Nykaa Fashion (apparel and accessories). It has offered approximately 3.1 million SKUs from 4,078 national and international brands to its consumers across two business verticals.
It’s beauty and personal care offering is extensive with 256,149 SKUs from 2,644 brands primarily across make-up, skincare, hair care, bath and body, fragrance, grooming appliances, personal care, and health & wellness categories.
The company manufactures its owned brand beauty and personal care products through third-party manufacturers and are sold under their brand name such as "Nykaa Cosmetics", "Nykaa Naturals" and "Kay Beauty".
It’s apparel and accessories vertical consist of 1,434 brands and 2.8 million SKUs with fashion products across four consumer divisions: women, men, kids, and home. Nykaa Fashion also has seven-owned brands.
The company provides an omnichannel shopping experience to its customers by providing both online and offline shopping channels. Online channels include mobile apps, websites, and mobile sites while offline channel consists of 80 physical stores spread across 40 cities in India.
Valuations
Considering the TTM (June 2021) adjusted EPS of Rs.2.54 on post-issue basis, the company is going to list at a P/E of 443.46 with a market cap of Rs.5,32,040 million. There are no listed companies in India whose business is comparable with that of company’s business, said Marwadi Shares.
Competitive strengths
It is one of India’s leading lifestyle focused consumer technology platform.
Resilient, capital efficient business with a combination of strong growth and profitability.
Founder-led company supported by a professional management team.
Key business strategies
It continues to acquire new consumers and increase consumer loyalty.
Deepen and broaden brand relationships
Leveraging on art of retailing to expand into lifestyle adjacencies and launch new channels
Further expand Omnichannel capabilities
Invest in the owned brand portfolio
Focused, selective international expansion as well as acquisitions and joint ventures in India
Peer comparison
There are no listed companies in India that engage in a business similar to that of the Company.
Key risks
The company operates in a highly competitive industry and failure to compete effectively could have a negative impact on the success of the business.
The business depends on the growth of online commerce industry in India and company’s ability to effectively respond to changing user behaviour on digital platforms.
Promoters and Management
Falguni Nayar is Managing Director and Chief Executive Officer; while Sanjay Nayar is non-Executive Director.
