Nykaa's parent company FSN E-Commerce Ventures makes stellar debut, stock lists at Rs 2,018 with 79% premium

FSN E-Commerce Ventures, the operator of Nykaa and Nykaa Fashion chain, made a bumper debut as the stock listed with a massive 79 percent premium on 10 November. The share opened at Rs 2,001 on the BSE, while the listing price on the National Stock Exchange was Rs 2,018. The Rs 5,352-crore public issue saw a huge demand and was subscribed 81.78 times during the October 28-November 1 period, receiving bids for 216.59 crore equity shares against the offer size of 2.64 crore shares. Qualified institutional buyers and non-institutional investors showed strong interest in the offer, as their reserved portion was subscribed 91.18 times and 112.02 times, respectively. The shares set aside for retail investors were subscribed 12.24 times and that of employees 1.88 times. FSN E-Commerce Ventures, a digital native consumer technology platform, is promoted by banker-turned-businesswoman Falguni Nayar and backed by private equity firm TPG Group. The company runs beauty and personal care business under the Nykaa vertical, where it has a leading position and apparel and accessories business under the Nykaa Fashion vertical. It also operates an offline channel, comprising 80 stores across 40 cities in India in three different store formats, as of August 2021. The Indian beauty and personal care (BPC) market is estimated to grow at approximately Rs 2 lakh crore by 2025 from Rs 1.1 lakh crore in 2020, and the Indian fashion market is expected to grow to approximately Rs 8.7 lakh crore by 2025 from Rs 3.8 lakh crore in 2020. The majority of analysts had assigned a “subscribe” rating to the IPO, citing the company’s strong brand and experienced management team, strong financials, leading market share in the beauty & personal care segment, wide product range and strong customer base, etc. Prabhudas Lilladher recommended subscribe rating to the IPO, saying Nykaa revolutionised the art of online retailing of BPC products in India. “Nykaa has been able to create strong consumer following and 70 percent repeat purchase led by 1) Inventory led BPC Model which ensures authenticity and guarantee of quality 2) wide product range offered by Nykaa 3) 2 million stock keeping units’, 3,826 brands and availability in 24,817 pin codes 4) consumer education through 1,363 influencers, ~39,500 Facebook posts (12.6 million followers) and 1.1 million Youtube subscribers 5) Ability to bring global brands like Estee lauder, Huda Beauty, Charlotte Tilbury etc. to Indian consumers, 6) private labels like Nykaa Beauty, Nykaa Naturals, Kay Beauty,” the brokerage reasoned. Motilal Oswal also said it liked Nykaa, given its leadership position in online BPC market, customer-centric approach, profitable tech platform and capital-efficient business model. “We believe Nykaa is rightly placed to tap the high growth digital/online penetration in the BPC/Fashion market. We recommend Subscribe,” it said. Nykaa reported a 38.10 percent growth in revenue from operations at Rs 2,440.89 crore in FY21, compared to the previous year. It clocked a profit of Rs 61.95 crore for FY21 against a loss of Rs 16.34 crore the previous year. During the quarter that ended in June 2021, it posted revenues of Rs 816.99 crore, a growth of 183.05 percent YoY. Profit during the quarter was Rs 3.52 crore against a loss of Rs 54.5 crore in Q2FY21.