Nykaa Fashion, the beauty giant founded by banker turned businesswoman Falguni Nayar in 2012 will launch its IPO on Thursday and close on November 1, 2021.
The woman-led unicorn offers 4,000 beauty, personal care, and fashion brands through its website, app and 80-odd brick-and-mortar stores. It also operates an offline channel and contains a total of 80 stores across 40 cities in India in three different store formats.
The IPO of FSN E-Commerce Ventures comprises a fresh issue of equity shares worth Rs 630 crore and an offer for sale (OFS) of 41,972,660 equity shares by the promoter and existing shareholders.
Commenting on the IPO, Sumir Verma, managing director at Merisis Advisors, said, “Nykaa is one of the bright spots in the ecommerce landscape, having built a profitable and capital-efficient business model. Falguni is a great leader and having a banker at the helm has helped Nykaa to be fiscally prudent, demonstrated by the fact that only a small portion of the IPO is targeted at raising capital for the company while most of it is to give exits to investors.”
The company in consultation with merchant bankers has finalised allocation of 21,296,397 equity shares to anchor investors, at Rs 1,125 per share, the upper end of the price band, as per a BSE circular, reported Moneycontrol.
Here are IPO details:
- Price Band: Rs 1,085-1,125 per share
- Retail investors quota: 10 per cent, QIB: 75 per cent, Non-institutional investors: 15 per cent, Employees have 2.5 lakh equity shares reserved for them.
- Minimum bid quantity: 12 or multiples of 12.
- Nykaa plans to use the proceeds from the IPO to invest in subsidiaries and set up new retail stores.
Interestingly, the company also received bids for 40 times the number of shares it plans to sell to anchor investors in its IPO, news agency Reuters reported, indicating strong interest in the sale.
Many of the brokers are positive about the IPO and they have also given it a subscribe rating Check what brokerage houses are saying:
Marwadi Shares and Finance: The brokerage house has advised to ‘subscribe with caution.’
INDmoney: The company’s status is robust because of marquee investors and promoter groups. Investors who wish to take exposure to an under-penetrated online cosmetics e-tailing business could consider investing in this issue.
Elara Capital: The financial firm has recommended to 'subscribe' to the IPO. It says Nykaa enjoys strong customer recall in beauty and personal care due to trust, differentiated marketing/content strategy, first-mover advantage/competitive edge and sticky existing customer base. Rising penetration and high-frequency drive growth in the beauty and personal care segment. The fashion segment is likely to grow at a faster pace on a small base, according to BloombergQuint.
ICICI Direct: Unrated: “FSN clocked EBITDA margins of 6.6 per cent in FY21 with RoCE at 12.9 per cent. At the upper end of the price band it is valued at 22x P/S on FY21,” the brokerage firm said. Nykaa is one of the leading lifestyle focused consumer technology platforms and is the preferred destination for luxury & private products in India, analysts highlighted. Among key risks associated with the brand, ICICI direct said that Nykaa is dependence on key external brands, sellers & suppliers and faces strong competition in the online space.
KRChoksey: Nykaa's total addressable market across beauty and personal care and fashion of Rs 4.91 lakh crore is expected to grow to Rs 10.68 lakh crore by 2025. The company has a huge opportunity worth Rs 1.12 lakh crore in the beauty and personal care market. Moreover, Nykaa's fashion opportunity is expected to grow at nearly 18 per cent per annum by 2025. Considering this, the brokerage house has recommended subscribing.