Nykaa is an Indian e-commerce company, founded by Falguni Nayar in 2012 and headquartered in Mumbai. It sells beauty, wellness and fashion products across websites, mobile apps and 76 offline stores. It is a unicorn startup, and as of 2020, was valued at ₹85 billion (US$1.1 billion).
It sells products which are manufactured in India as well as internationally. In 2015, the company expanded from online-only to an omnichannel model and began selling products apart from beauty. In 2020, it retails over 2,000 brands and 200,000 products across its platforms.
E-commerce beauty giant Nykaa will open its initial public offering (IPO) to subscribers on Thursday, aiming for a total valuation of over $7 billion. Founded by former investment banker Falguni Nayar, the woman-led unicorn offers 4,000 beauty, personal care and fashion brands through its website, app and 80-odd brick-and-mortar stores.
The IPO will open for subscription on October 28 and conclude on November 1. It comprises of equity shares aggregating up to ₹630 crore (fresh issue) and an offer for sale (OFS) of up to 41,972,660 equity shares by promoters or existing shareholders.
The price band of the public issue is fixed at ₹1,085-1,125 per share. Promoters, including founder and CEO Falguni Nayar, currently own more than 50 per cent share in the company.
The beauty and fashion ecommerce company aims to raise ₹5,352 crore with this public issue. Of which, nearly ₹630 crore will be raised through fresh issue of shares.
Promoter Sanjay Nayar Family Trust will sell up to 48 lakh equity shares through OFS, and investors TPG Growth IV SF Pte Ltd and Lighthouse India Fund III will offload 54.21 lakh equity shares and 48.44 lakh equity shares, respectively.
The company has reserved 2.5 lakh equity shares of the total issue size for employees.
Objects of the Issue:
- Investment of ₹ 420 million in certain of their subsidiaries, namely, FSN Brands and / or Nykaa Fashion for funding the set-up of new retail stores;
- ₹ 420 million towards capital expenditure to be incurred by the company and investment in certain of their subsidiaries, namely, Nykaa E-Retail, Nykaa Fashion and FSN Brands for funding the set-up of new warehouses;
- ₹ 1,560 million towards repayment or prepayment, of outstanding borrowings availed by the company and one of their subsidiaries, namely, Nykaa E-Retail;
- Expenditure of ₹ 2,340 million to acquire and retain customers by enhancing the visibility and awareness of the brands; and
- General corporate purposes.
Summary of financial Information (Restated Consolidated)
| Particulars | For the year/period ended (₹ in Millions) | ||||
| 30-Jun-21 | 30-Jun-20 | 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |
| Total Assets | 16,314.82 | 10,071.84 | 13,019.90 | 11,244.82 | 7,756.57 |
| Total Revenue | 8,217.14 | 2,910.46 | 24,526.37 | 17,778.50 | 11,163.82 |
| Profit After Tax | 35.22 | (545.07) | 619.45 | (163.40) | (245.39) |
Another reason behind the hype of Nykaa’s IPO is its profitability. The company has been EBITDA (earnings before interest, taxes, depreciation, and amortisation) positive since the financial year 2019. The indicated that the company was profitable at an operational level, even if it was reporting a loss after tax.
Hem Securities noted that Nykaa’s financial statement for the last three years highlights that the company is “focused” on capital efficiency and unit economics, while simultaneously building for scale and growth.
“The company is also serving an underpenetrated market — only 8% of the beauty and personal care segment is via ecommerce. Thus, the opportunity exists to cater to a large market size of $152 billion by 2025 for beauty, personal care and fashion and $28 billion alone for beauty and personal care,” Neha Khanna, Director at ValPro, said.
Nykaa IPO Lot Size
The Nykaa IPO market lot size is 12 shares. A retail-individual investor can apply for up to 14 lots (168 shares or ₹189,000).
| Application | Lots | Shares | Amount (Cut-off) |
| Minimum | 1 | 12 | ₹13,500 |
| Maximum | 14 | 168 | ₹189,000 |
| Analysts | Recommendation |
| KRChoksey | Subscribe |
| Hem Securities | Subscribe |
| ValPro | Subscribe |
| Anand Rathi | Subscribe-Long Term |
Kotak Mahindra Capital, Morgan Stanley India, BofA Securities India, Citigroup Global Markets India, JM Financial and ICICI Securities are merchant bankers to the issue.
