Nykaa To Acquire Additional Stakes In Dot & Key, Earth Rhythm For INR 309.8 Cr

SUMMARY

Nykaa said that the additional stake acquisition in Dot & Key will increase its holding in Dot & Key to 90% from 51% currently

Nykaa will acquire an additional stake in Earth Rhythm for INR 44.5 Cr, following which the latter will become a subsidiary

Nykaa today reported a 152% YoY increase in its net profit to INR 13.6 Cr in Q1 FY25

Beauty and fashion ecommerce major Nykaa is acquiring an additional stake in beauty brand Earth Rhythm for INR 44.5 Cr.

In an exchange filing, Nykaa said Earth Rhythm will become a subsidiary of Nykaa following the acquisition. The acquisition is expected to be completed by September 2025.

Earth Rhythm is currently an associate of Nykaa. The ecommerce major acquired an 18.6% stake in Earth Rhythm in 2022.

“The company will be acquiring up to 57,302 equity shares and 12,226 warrants of Earth Rhythm through primary and secondary acquisition thereby resulting in Earth Rhythm becoming subsidiary of the company,” the filing said.

Founded in 2019, Earth Rhythm is a D2C skincare and beauty brand with over 250 SKUs. Its revenue rose 20.3% to INR 30.7 Cr in FY24 from INR 24.5 Cr in FY23.

“What we like about this brand (Earth Rhythm) is it has a very differentiated positioning. It’s sustainable and inclusive. It’s certified organic, plant-based, and 99% plastic-free… that’s what we like about the positioning of this brand,” said Nykaa’s MD and CEO Falguni Nayar during company’s Q1 earning call.

Meanwhile, Nykaa also said that it is acquiring an additional 39% stake in its subsidiary Dot & Key for INR 265.3 Cr.

The additional stake acquisition in the skincare solutions subsidiary will increase Nykaa’s holding in Dot & Key to 90%.

“The company will be acquiring 5,29,286 equity shares of Dot & Key from the Promoters/ existing shareholders of Dot & Key,” Nykaa said, adding that the acquisition is expected to be completed by September 30, 2024.

It is pertinent to note that Nykaa first acquired a 51% stake in Dot & Key in 2021.

Founded in 2018, Dot & Key provides differentiated skincare solutions. Nykaa said that the brand has been profitable since Q4 FY23. Dot & Key’s revenue surged 244% to INR 198.3 Cr in FY24 from INR 57.7 Cr in the previous year.

““This has been a fantastic investment by Nykaa and (that’s why we have) decided to go ahead and acquire an additional 39% stake… What we like about Dot & Key is it has a differentiated assortment. It also has clutter-breaking packaging, unique and patented,” added Nayar.

Nykaa made the acquisition announcements along with its Q1 financials. The startup reported a 152% YoY increase in its net profit to INR 13.6 Cr in Q1 FY25. Operating revenue increased 22.8% to INR 1,746.1 Cr during the quarter under review from INR 1,421.8 Cr in the year-ago quarter.

Ahead of the earnings announcement, shares of Nykaa ended today’s trading session 4% lower at INR 186.60 on the BSE.

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