Segantii India Mauritius offloads over 33 lk shares of FSN E-Commerce Ventures-backed Nykaa; stock slides 9% - analysts say this

Nykaa, FSN E-Commerce Ventures, Segantii India Mauritius: FSN E-commerce Ventures, which operates under the brand name Nykaa, shares have witnessed the heat during Tuesday’s trading session as the anchor investors' lock-in period ended last week.

Segantii India Mauritius has offloaded 33,73,243 shares of Nykaa's parent firm FSN E-Commerce Ventures for Rs 67 crore through an open market transaction, according to the bulk deal data available with the National Stock Exchange (NSE).

The share price of Nykaa was one of the top losers on the exchanges today, it has cracked over 9 per cent to Rs 192.45 per share on the BSE as compared to a 0.4 per cent rise in the BSE Sensex today.

The shares were offloaded at an average price of Rs 199.24 apiece, taking the transaction value to Rs 67.20 crore. Meanwhile, Hermes Investment Funds Public Ltd Company acquired 25,82,921 shares of the company.

Nykaa’s promoters are decreasing their shareholding in the company, experts said in their view.

“Nykaa, which effectively saw its lock-in expiry come into effect now, saw heavy sell-off as shares slid. This is interesting because currently, Nykaa’s promoters hold over 50 per cent of its shares,”Avinash Gorakshakar, director - research, Profitmart Securities said in his comment.

He added that today’s crack in the stock could mean that Nykaa’s promoters are offloading their shares to book profits.

According to ICICI Securities, the competition for Nykaa will likely intensify from both vertical and horizontal peers. The brokerage expects beauty and personal care revenues to grow and believe Nykaa’s journey could be different – it will have to go more mainstream to drive this growth.

The brokerage points out key risks such as chasing growth at elevated levels can be dilutive of gross margin, and success in the fashion business can be difficult given the higher competition in the category. ICICI Securities maintained a HOLD rating on the stock.