SUMMARY
Right ahead of receiving SEBI’s approval for its IPO, Nykaa had raised its fresh issue size to INR 630 Cr
The decision was taken on the back of strong financial performance; the fashion and beauty unicorn recorded a net profit of INR 3.52 Cr
It plans a foray into the international market starting with the Middle East and the UK
As the lifestyle unicorn Nykaa is set to go public in the next few days, the company plans to spread its footprint in the lifestyle and beauty segment and transform into a ‘house of brands’ from its current form of a multi-brand retailer.
At a pre-IPO virtual media interaction on Friday, Falguni Nayar, the CEO of FSN E-Commerce, which operates Nykaa, outlined plans of the company to build a number of lifestyle categories and turn the company into an umbrella brand for lifestyle products.
Speaking on Nykaa’s plans, she said that the fashion and beauty unicorn plans to enter the Middle-East market initially and is also looking at the UK, which may lead its way into other countries in Europe.
Nayar added that the company plans to transform from a multi-brand retailer into a ‘house of brands’ going ahead.
“We want to build a bunch of lifestyle categories and become a house of brands rather than just a multi-brand retailer,” she said.
She added that Nykaa will enhance its operations for ESG (Environmental, Social and Governance) efforts, sustainable beauty and lifestyle and wellness.
The statement comes three days before the company’s IPO is scheduled to open aimed to raise over INR 5,000 Cr.
Replying to why the company decided to go public, Falguni Nayar highlighted that a public listing would allow shareholders to enter and exit stocks as and when they want to.
“Listing gives independence to the company and the shareholders to enter and exit their shares,” she said.
Right ahead of receiving SEBI’s approval for its initial public offering (IPO), FSN E-commerce Ventures, which runs the online lifestyle marketplace Nykaa raised its fresh issue size to INR 630 Cr.
The initial fresh issue size of the Nykaa mentioned in its draft red herring prospectus (DRHP) was INR 525 Cr.
The decision was taken on the back of a strong financial performance during the April-June quarter of FY22 and the recovery from the second wave of the pandemic said Nykaa’s CFO Arvind Agarwal.
Strong Financial Performance
During the first quarter of FY22, the company reported a net profit of INR 3.52 Cr, against a loss of INR 54.50 Cr during the Covid-hit first quarter of the last fiscal.
“We have increased the primary side by 20%. It reflects our business performance in Q1,” Agarwal said, adding that the increase would also lead to higher allocation for the proposed objectives of the offer.
The GMV of the online lifestyle unicorn in the last financial year (FY21) stood at $547 Mn, with a 50% year-on-year (YoY) growth.
Its gross profit margin for the quarter was 40.6% compared to 39% in the whole of FY21.
How Nykaa Plans To Use The IPO Proceeds
Noting that the amount earmarked for utilisation in marketing and branding has been increased. Agarwal said, “this is a refresh of our plans.”
As per the RHP:
- INR 234 Cr would be spent on acquiring and retaining customers by enhancing the visibility and awareness of its brands.
- Spends on FSN Brands and Nykaa Fashion for funding new retail stores have been increased from INR 35 Cr to INR 42 Cr.
- Investments for setting-up of new warehouses has been increased to INR 42 Cr from the original amount of INR 35 Cr.
- It will utilise INR 156 Cr to repay or prepay outstanding borrowings availed by FSN E-Commerce and its subsidiaries against the previously earmarked INR 130 Cr.
Nykaa’s initial public offering (IPO) is set to open on October 28, where the company plans to raise INR 5,000 Cr at the price band of INR 1,085-1,125 per share.
Apart from the fresh issue, its offer for sale (OFS) of 41,972,660 shares. The offering will close on November 1, 2021.
Under the OFS, Sanjay Nayar Family Trust, the company’s promoter, is offering up to 4.8 Mn shares. Nykaa’s investors — TPG Growth IV SF Pte Ltd and Lighthouse India Fund III would sell up to 5.421,510, and 4,844,620 shares, respectively.
Falguni Nayar, the founder of the ecommerce unicorn, along with her husband Sanjay Nayar, their children Anchit Nayar and Adwaita Nayar hold 53.5% share in the company.
Founded by former investment banker Nayar in 2012, Nykaa has emerged as a go-to-ecommerce platform for beauty and fashion products. The company competes against heavily invested funded giants such as Amazon, Myntra, and Flipkart.
Nykaa entered the unicorn club in 2020 when it raised INR 100 Cr ($13 Mn) from Steadview capital at a valuation of $1.2 Bn.
