Online beauty marketplace Nykaa was subscribed 1.55 times on the opening day as it received bids for approx 4.09 crore shares against about 2.65 crore shares put on offer, as per data by the National Stock Exchange.
The category for Qualified Institutional Buyers (QIBs) received 1.39 times subscription whereas retail individual investors (RIIs) received 3.50 times. The portion allocated to non-institutional investors has been subscribed 60 per cent.
While most brokerages were optimistic about the company's IPO and asked investors to subscribe, Marwadi Shares and Finance asked investors to "subscribe with caution". They stated, "...valuations on an absolute basis based on past financials keeps us cautious at the same time."
"With the increasing popularity of online platforms and the fast-expanding beauty industry in India, FSN e-commerce Ventures seem to be in a great spot. Considering the current financial position of FSN e-commerce Ventures Private Limited, it is poised for impressive growth. Accordingly, investors should consider subscribing to the initial share sales of this company," said Angel One.
"There are no peers in the listed space that are engaged in the business similar to that of FSN. At a higher price band of Rs. 1,125, the company is demanding an EV/TTM Sales multiple of 21.6x, which seems to be reasonably priced. Considering the growth potential in the beauty & personal space and also the lower e-commerce penetration, we feel that FSN has a huge untapped market", Choice Broking said in a note.
The IPO comprises a fresh issue of equity shares worth Rs 630 crore and an offer for sale of about 4.19 crore shares by the promoter and existing shareholders. The previous issue size was Rs 525 crore.
FSN E-Commerce Ventures Ltd on Wednesday raised Rs 2,396 crore from anchor investors
Nykaa intends to use the proceeds from the IPO for further expansion by means of setting up new retail stores and establishing new warehouses, the company's red herring prospectus stated. Additionally, it intends to retire some of the debt, which would potentially help bring down interest costs and further up profitability. This, alongside deploying the proceeds for marketing and promotional activities in order to strengthen its in-house brands such as Nykaa Cosmetics, Nykaa Naturals and Kay Beauty.
Those selling shares in the OFS include promoter Sanjay Nayar Family Trust and shareholdersTPG Growth IV SF Pte Ltd, Lighthouse India Fund III, Limited, Lighthouse India III Employee Trust, Yogesh Agencies & Investments, JM Financial and Investment Consultancy Services and some individual shareholders.
Shares of the company will be listed on the BSE and NSE.
FSN E-Commerce Ventures was founded in 2012 by Falguni Nayar as a digitally based content-led retail marketplace. It now has a diverse portfolio of beauty, personal care and fashion products inclusive of its in-house brands sold via its business verticals, Nykaa and Nykaa Fashion. The company is one of the leading influential lifestyle platforms in India with over 12.6 million followers across leading social media platforms as of March 2021.
The company has reported a net profit of Rs 61.94 crore for FY21 compared to a net loss of Rs 16.34 crore in FY20. Its revenue from operations jumped to Rs 2,441crore in FY21 from Rs 1,768 crore in FY20.