Amid Mounting Competition From Tata & Reliance, NSE Excludes Nykaa From Nifty Next 50 Index

The National Stock Exchange (NSE) has excluded beauty ecommerce major Nykaa from its Nifty Next 50 and Nifty 100 indices. 

The stock exchange made the announcement while rejigging its key indices on Thursday (August 17). The changes will come into effect from September 29. 

The decision to replace Nykaa was taken by the Index Maintenance Sub-Committee (Equity) of the NSE. However, the scrip has now been included in four other indices namely Nifty Midcap 150, Nifty Midcap 100, Nifty MidSmallcap 400 and Nifty MidSmall India Consumption.

The move to exclude Nykaa comes a month after NSE Indices, in a discussion paper, floated the idea of only keeping futures and options (F&O) stocks traded in the F&O segment in the Nifty Next 50 Index. 

However, Nykaa’s exclusion has not been without reason. The share price of Nykaa’s parent, FSN E-Commerce, has withered 14.28% year-to-date on the NSE. The company also logged its 52-week low of INR 114.25 in April this year. This is major because Nykaa had a battered 2022 as the stock plummeted to a record low during the year. 

Making matters worse has been its multi-front war with incumbents and deep-pocketed giants. While on the one hand, fashion giants like Reliance’s AJIO, Tata CLiQ, and Flipkart’s Myntra have launched assertive campaigns in the fashion sector, on the other hand, competitors such as Tata Cliq Palette, Sephora, SS Beauty by Shopper’s Stop, and Reliance Tira are directly challenging Nykaa’s dominance.

Nykaa’s move to wade into the offline space pits it against conglomerates that have years of experience in building retail businesses and deep pockets to sustain a capex-heavy venture. The beauty ecommerce giant has also been plagued by high attrition of top executives, which have left the company in droves. 

Despite the hiccups, Nykaa appears to be chasing the right growth for its fashion vertical while also charging an additional ‘convenience fee’ on all orders. The beauty arm also continues to see an uptick in most operational metrics. 

Last week, Nykaa reported a consolidated net profit of INR 5.4 Cr, up 8.2% year-on-year (YoY) while scaling up its operating revenues 23% YoY to INR 1,421.8 Cr in Q1 FY24. Nykaa shares closed 0.72% higher at INR 133 on the NSE on Thursday (August 17).