Teji Mandi

Updated on: Monday, October 25, 2021, 04:57 PM IST

Teji Mandi Explains: Will Nykaa IPO nail it?

Teji Mandi Explains: The secret behind Nykaa’s billion-dollar business |

Teji Mandi Explains: The secret behind Nykaa’s billion-dollar business |


India’s largest e-retailer of beauty and personal care products is finally lining up at the IPO counter. Nykaa is planning to launch the IPO on October 28 to raise about Rs 5,200 crore. The company’s IPO is buzzing with excitement for its unique business and monopoly. With no competitor at bay makes it even more attractive for the investors. It’s a profitable business run by an experienced investment banker, no wonder everyone’s got an eye on it!

IPO Details

The price band of the IPO remains unknown and will be announced by early next week. The IPO will include a fresh issue of shares worth Rs 630 crore, and the rest will be offloaded by the existing shareholders. Currently, the Nayar family holds a 53% stake in FSN E-Commerce Ventures, the parent firm of Nykaa. Post-IPO, they will continue to remain the majority stakeholders with at least a 51% stake, which means the operations will run smoothly under Nayar’s vision. Considering the wide popularity, the IPO is expected to garner a valuation of around $7 billion in the IPO. If this happens, it could break Zomato’s debut records.

Grey Market Rumours

Grey market is where unofficial trading of IPO shares takes place even before they are launched. It measures the buzz on IPOs, whether they are trading at a premium or discount. As per the media reports, Nykaa’s shares are trading around Rs 670 against the tentative price of Rs 1,125-1,150 per share. Earlier it was trading at Rs 730 against the tentative price. There’s a pickup in activity on Nykaa, however, the interest can only be known once the price band is announced.

The Big Moat

The biggest moat, i.e. competitive advantage of Nykaa is not its platform, but it’s content. Yes, Nykaa at the very heart of its business is actually a content generating machine. It has a network of 1,363 influencers (as of March 31, 2021) and 6 platforms dedicated just to cater its customers with content, like Nykaa Army, Nykaa TV, Explore, Nykaa Beauty Book and so on. This has created a networking effect so strong that its customers have become loyal to Nykaa. There is a ‘personal’ touch in its every content, which shows that it cares for its customers.

Will Nykaa Sail Through Post-IPO?

It looks like it will. The business is run by an investment banker turned entrepreneur. Investors are not going to bet on the company but the captain of the ship, Falguni Nayar. In just 9 years, she turned her startup into an unicorn (billion dollar company). Looking at its robust financials, the company did not really need an IPO, but Nayar’s vision of making it bigger only shows her courage and capability. It looks like this is just the beginning for Nykaa.

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Published on: Monday, October 25, 2021, 04:57 PM IST