Nykaa Soars 11% After 5:1 Bonus Share Issuance Announcement

SUMMARY

Nykaa’s board approved issuance of 5 equity shares for every 1 fully paid-up equity share held by the shareholders

Shares of Nykaa jumped 10.8% to the day’s high of INR 1,411.80 on the BSE following the announcement

The company has fixed November 3 as the record date for determining the eligibility of shareholders to receive bonus shares

Shares of FSN Ecommerce Ventures, the parent of beauty ecommerce platform Nykaa, soared as much as 11% on Monday (October 3) after the company announced issuance of bonus shares in the ratio of 5:1.

Nykaa shares jumped 10.8% to the day’s high of INR 1,411.80 on the BSE following the announcement. However, they pared some of the gains and were trading 5.6% higher at INR 1,345 at 01:25 PM IST.

In an exchange filing, earlier in the day, Nykaa said that its board of directors has approved “bonus issue of equity shares in the proportion five fully paid-up equity share of INR 1 each for every one fully paid-up equity shares of INR 1 each held by the shareholders of the company as on the record date, subject to shareholders’ approval by way of postal ballot”.

The company has fixed November 3 as the record date for determining the eligibility of shareholders to receive bonus shares.

Simultaneously, it also announced the formulation and implementation of the employee stock option plan 2022 (‘ESOP 2022) to grant stock options to eligible employees of the company.

Falguni Nayyar-led Nykaa reported a 42% year-on-year (YoY) rise in its consolidated net profit to INR 5 Cr during the June quarter. However, profit fell on a quarter-on-quarter basis.

Revenue from operations grew 41% YoY to INR 1,148.4 Cr in Q1 FY23, and EBITDA grew 71% YoY to INR 46.1 Cr.

Founded in 2012, Nykaa went public in late 2021. Its shares listed at INR 2,018 on the NSE on November 10, 2021, a hefty premium of nearly 80% over its issue price of INR 1,125 apiece.

From a high of INR 2,574 in November 2021 to a low of INR 1,271.30 in May 2022, Nykaa has seen it all. Despite the jump in share price today, the stock is trading 35% lower year-to-date and 38% from its listing price.

The company is trying to consolidate its position as a ‘house of beauty brands’ from an ecommerce marketplace. Recently, it acquired content to commerce platform Little Black Book and D2C wellness and lifestyle brands Earth Rhythm, Kica, and Nudge Wellness.

It has over 100 physical stores across India, and also forayed into the men’s innerwear category recently. It competes with the likes of Purplle, Plum, and MyGlam in the $5.6 Bn beauty market.