Nykaa IPO: Top 10 things to know before the public subscription opens today

FSN E-Commerce Ventures Ltd, which runs online marketplace for beauty and wellness products Nykaa, on Wednesday said it has raised Rs 2,396 crore from anchor investors ahead of its initial share-sale, which opens for public subscription on Thursday. The company has decided to allocate a total of 21,296,397 equity shares to anchor investors at Rs 1,125 a share, aggregating to Rs 2,395.84 crore, according to a circular uploaded on the BSE website.

1. Profile: FSN E-Commerce Ventures (Nykaa) is a digitally native consumer technology platform, delivering a content-led, and lifestyle retail experience to consumers. It has a diverse portfolio of beauty, personal care and fashion products including its owned brand products manufactured by the company.

Nykaa operates under two verticals – Nykaa: Beauty and Personal Care; and Nykaa Fashion: Apparel and Accessories. Its beauty and personal care offering are extensive with 256,149 SKUs from 2,644 brands primarily across makeup, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories.

Nykaa Fashion housed 1,434 brands and 2.8 million SKUs with fashion products across four consumer divisions: women, men, kids and home. It offers consumers an omnichannel experience by providing both online and offline channels. It also focuses on educating consumers via digital content, digital communities and tech product innovations, which is an integral component of its business model.

2. Issue Open on October 28, 2021, and Issue Close on November 1, 2021
3. Issue Price is Rs 1,085-1,125 /Share
4. Total Issue Size is Rs 5,351.9 crore, of which Offer for Sale is Rs 4,721.9 crore
5. Fresh Issue is Rs 630 crore
6. Face Value is Rs 1 / share
7. Market Lot is 12 Equity Shares
Issue Type Book Built Issue

8. Lead Book Running Managers are Kotak Mahindra Capital Company, Morgan Stanley India Company, BofA Securities India, and Citigroup Global Markets India.

9. Valuation: Nykaa has a large market opportunity aggregating Rs 10.6 trillion in the fast-growing beauty, personal care and fashion industry by 2025 in India. The Indian beauty and personal care market are estimated to grow to Rs 2 trillion by 2025 from Rs 1.1 trillion in 2020. The Indian fashion market is estimated to grow to Rs 8.7 trillion by 2025 from Rs 3.8 trillion in 2020. 

The growth is projected to be primarily driven by the market shift towards the organized sector, high growth of e-commerce due to increased internet penetration, growing wallet share for beauty, personal care and fashion products and increased spending leading to subsequent premiumization across categories. Further, compared to other mature e-commerce categories, beauty and personal care and fashion have lower online penetration.

10. Results: Nykaa is well placed to benefit from growing industry trends given its resilient, capital-efficient business with a combination of strong growth and profitability. Its financial performance has been strong with a revenue CAGR of 48.2% over FY19-21.

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The operating margins have also seen a marked improvement from 1.85% in FY19 to 6.61% in FY21. Going forward, Nykaa intends to continuously acquire new customers and increase its customer loyalty. It also plans to expand into lifestyle adjacencies and launch new channels. It also aims to explore expansion selectively and prudently into international markets. Given the positive industry prospects and Nykaa’s strong foothold, we have a positive on the company for the long term.