Nykaa Stock Hits An All-Time Low Of INR 115

Beauty ecommerce platform Nykaa on Tuesday (April 25) fell to an all-time low of INR 115.5, during the intraday trade, on the BSE.

The stock resorted to a record downward spiral barely a day after Nykaa onboarded 50 new senior executives for big-ticket positions such as CTO and CFO.

Interestingly, the decline in the company’s share prices is nothing new. In the past five trading sessions, the Nykaa stock has tanked nearly 7% — from INR 125.5 on April 18 to its current levels. 

From an adjusted listing price of INR 400, Nykaa’s shares have cratered to INR 115.5, wiping off more than 71% of the investor wealth.

Curiously, the dip, more or less, mirrors its financial health. It is crucial to note here that the startup got listed when it reported a profit of INR 29 Cr in the quarter that ended in December 2021. Its profits fell 68% year-on-year (YoY) to INR 9 Cr in the same quarter last year. 

Interestingly, between 2021 and 2022, the startup’s profits fell in the same range as its stock price, at 69%. 

Overall, the factors that are primarily responsible for bringing the Nykaa stock down to its knees are macroeconomic uncertainties, apprehensions of a recession and the Russia-Ukraine war.

Adding to its troubles, the startup also witnessed many marquee investors offloading their stakes, following the expiration of its lock-in period late last year. 

To control the damage, the beauty ecommerce startup was seen wooing investors with bonus shares in November 2022 to curb the selloff in the capital markets, but to no avail.

Then, a slew of senior executives jumped its ship, earlier this year, raising doubts over its corporate governance and the lack of experienced leadership helming it. 

However, the mother of all challenges came earlier this month when deep-pocketed Reliance forayed into the beauty space with its omnichannel platform, Tira. 

Amid back-to-back jolts, brokerage firm Macquarie, too, slashed Nykaa’s target price to around INR 115 last month, stating that giants entering the beauty space could ‘exacerbate’ problems for the listed startup.

In the quarter that ended December 2022, Nykaa saw its profit shrink 70% YoY to INR 8.5 Cr against a 33.2% YoY increase in operating revenue to INR 1,462.8 Cr during the same period. 

Shares of Nykaa closed at INR 116.9 on the BSE on Tuesday.