Nykaa IPO to open on October 28 : Firm to raise Rs 630 cr via fresh equity

Nykaa, a company owned by FSN E-Commerce Ventures Ltd, will go public on Thursday, October 28th, 2021. The cosmetics startup’s public offering consists of a fresh issue of shares worth Rs 630 crore and an offer-for-sale (OFS) by selling shareholders of up to 4.19 crore equity shares. The subscription period for this issue will end on November 1, 2021. For qualifying employees, the offer includes a reserve of up to 2.5 lakh equity shares. The company said in its red herring prospectus (RHP) that it may provide eligible workers bidding in the employee reservation section a discount of up to 10% of the offer price.

Kotak Mahindra Capital Company, Morgan Stanley India Company, BofA Securities India, Citigroup Global Markets India, ICICI Securities, and JM Financial are the global coordinators and book running lead managers for the offer. The issue’s registrar will be Link Intime India.

There are no publicly traded firms in India that operate in a similar industry to Nykaa. Promoters Sanjay Nayar Family Trust and investors TPG Growth IV, JM Financial and Investment Consultancy Services, Sunil Kant Munjal, Harindarpal Singh Banga jointly with Indra Banga, and others are among the selling shareholders of this new-age internet corporation. Falguni Nayar, Sanjay Nayar, Falguni Nayar Family Trust, and Sanjay Nayar Family Trust are the company’s promoters. For the last three fiscal years, the weighted average return on net worth was 2.82 percent.

According to persons who deal in unlisted shares of the firms, Nykaa shares were quoting at a premium of Rs 670 in the grey market on Friday, compared to the tentative price of Rs 1,125-1,150 per share. Nykaa’s GMV was Rs 4,046 crore in the financial year 2021, with revenue from operations of Rs 2,441 crore and an EBITDA margin of 6.61 percent. Despite the negative impact of COVID-19 on the company’s business, revenue from operations increased by 38.10 percent in the Financial Year 2021 compared to the Financial Year 2020. In the financial year 2021, the company had a profit of Rs 62 crore, compared to a restated loss of Rs 16 crore in the previous year.

Nykaa purchased 51 percent of Dot & Key Wellness Private Limited’s outstanding equity shares by subscription and purchase of equity shares on September 28, 2021. The company’s main sources of revenue include agreements with beauty, personal care, and fashion brands, as well as delivery firms, manufacturers, distributors, and other vendors, including packaging material suppliers. Nykaa operated 80 physical locations in 40 cities across India as of August 31, 2021 (79 outlets for beauty and personal care items and one store for fashion products) (Nykaa Luxe, Nykaa On-Trend, and Nykaa Kiosks).