Nykaa - FSN E-Commerce Ventures

Incorporated in 2012, omnichannel company FSN E-Commerce Ventures’  Nykaa has redefined the way Indians shop for beauty products. The company was started by an ex-investment banker, Falguni Nayar, whose aim was to deliver beauty products to women, even in the remote corners of India. With the right investments in marketing and warehousing, their business grew. Today, Nykaa is a mostly online lifestyle-focused technology platform targeting Indian men and women. It sells around 100 products per minute. Its products range from luxury gowns to health supplements.

The offer for sale comprises shares of founders/promoters Falguni Nayar and Sanjay Nayar. They along with their respective family trusts own around 54.3%, which is about 25.3 crore shares.

Reasons for going public and objective of the IPO

The company is launching the IPO to raise funds. With the proceeds from the IPO, Nykaa will spend:

• ₹35 crore to set-up new retail stores for some of its units
• ₹35 crore  to set up new warehousing
• ₹200 crore for marketing of its brand
• ₹130 crore for repayment of its loans
• 25% of net proceeds for general corporate purposes

Shareholders of Nykaa

Following is the list of the top shareholders of the company.

Strengths 

• Constant engagement with customers by offering classes on makeup, health and beauty
• Extensive range of products, explosive choice to customer- houses thousands of brands
• Both physical and online presence 
• Own warehousing. Ensures availability of products and timely delivery
• Owned brands that offer diversification to customers 
• Brand support from actors, experts and vloggers

Opportunities

• The rise of the e-commerce sector in India presents an excellent opportunity for Nykaa to rise and shine. 
• The evolution of Artificial Intelligence may help Nykaa to attract more customers. manage their demands and fulfil all their requirements.
• The growing social media followers may lead to a growing customer base.

Threats

• Competition in the form of e-commerce giants like Amazon and Flipkart
• Increasing competition in the beauty and skincare industry
• Cheaper and counterfeit goods available in the black market
• Amendments in consumer protection rules in India, which might have adverse effects on operations and financials

Industry outlook

From 2020 to 2025 Nykaa expects

• The Indian beauty and personal care market to almost double in growth
• The Indian fashion market to more than double in growth
• A compound annual growth rate (CAGR) of 11% for the retail market 
• A CAGR of 17% for the retail market for non-essential goods 

Financial performance

Despite the pandemic, Nykaa’s total income rose 38% between FY20 and FY21

From a loss of ₹16.34 crore in the year 2020, Nykaa saw a profit of ₹61.94 crore in FY 2021 

This was mainly due to the increase in revenue in operations from online shopping.

All in all, Nykaa is expected to benefit from the growing beauty, personal care and fashion industry and the over-popularity of digital media. However, only time will tell.