Founded in 2012, e-commerce firm 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 company has filed the DRHP for its IPO. Here are the key details.
Here are the key details.
Key highlights
-Incorporated in 2012, FSN E-Commerce Ventures is an omnichannel beauty and fashion retailer.
-The company operates two online platform - Nykaa (Beauty and personal care) and Nykaa Fashion (Apparel and accessories).
-As of March 31, 2021, its mobile applications had cumulative downloads of 43.7 million.
-The company also has an offline presence with 73 physical stores across 38 cities as of March 2021.
-In FY21, the company’s total gross merchandise value (GMV) was ₹4,045 crore.
Offer details
IPO size: ₹5,324 crore
Fresh issue: ₹630 crore
Offer for sale: ₹4,694 crore
Price band: ₹1,085-₹1,125 per share
Lot size: 12 shares
Cost per lot: ₹13,500
Issue opens: 28 Oct 2021
Issue closes: 1 Nov 2021
Basis of allotment date: 8 Nov 2021
Initiation of refunds: 9 Nov 2021
Credit of shares to demat account: 10 Nov 2021
Expected listing date: 11 Nov 2021
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% from FY20 to 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.