Middle East Push: Now, Nykaa Incorporates New Subsidiary In Saudi Arabia

Beauty and fashion ecommerce major Nykaa has incorporated a wholly-owned subsidiary in Saudi Arabia — Nysaa Trading LLC — as part of its broader plan to expand its market beyond domestic borders.

In an exchange filing today (September 20), the company said that Nysaa Trading LLC is a wholly owned subsidiary of Nessa International Holdings, a step-down subsidiary of Nykaa’s parent FSN E-commerce Ventures.

The newly-incorporated subsidiary will retail beauty and personal care (BPC) products in the international and domestic markets through online and offline channels. These will include cosmetics, toiletry, beauty and hair care products, perfumes and beauty soap.

Nysaa Trading LLC has been incorporated with a subscribed share capital of 3 Lakh Saudi Riyal (about INR 6.67 Cr). Nessa International will hold a 100% stake in Nysaa International with Nykaa’s parent indirectly holding 55% stake.

However, the newly-incorporated Nykaa subsidiary is yet to commence business operations. 

The development comes at a time when Nykaa is intensifying efforts to increase its presence in the Middle East. In July this year, it incorporated a wholly-owned subsidiary in Qatar – Nysaa Cosmetics Trading.

Earlier this year, Nykaa opened the first physical store under the Nysaa brand in Dubai, marking its foray into an international market. The Falguni Nayar-led company plans to invest $4.4 Mn in Nysaa.

It is pertinent to note that Nykaa partnered Apparel Group, one of largest omnichannel retailers in UAE, in 2022 to enter the Gulf Cooperation Council (GCC) region.

Nykaa aims to open 70 stores in the GCC market under the Nysaa brand in the next five years. The company aims to achieve a 7% share in the GCC beauty market during this period, the company said during its ‘Annual Investor Day’. 

Nykaa’s beauty bet on GCC is not without reason. The region has per capita spend of a whopping $500 on beauty and personal care products, one of highest globally.

Back at home, Nykaa has ramped up its same day and next day delivery offerings. At the company’s 12th annual general meeting, chairman and CEO Nayar said the company is now delivering 60% of its orders within the next day across top 110 cities, which account for two-third of the company’s overall order volumes.

However, earlier this month, Kotak Institutional Equities downgraded Nykaa to ‘sell’ from a previous ‘add’ rating while lowering the fair value to INR 190 from INR 195 earlier. This would imply a downside of over 5% from the stock’s previous close.

Shares of Nykaa were trading 1.22% higher at INR 203.50 apiece on the BSE today at 1:35 PM.

Nykaa operates in the country’s fast-growing beauty and personal care market, which is expected to become a $28 Bn+ opportunity by 2030, accounting for 7% of the overall ecommerce market, according to Inc42 data.