Nykaa’s Board To Consider Issuance Of Bonus Shares

Beauty ecommerce startup Nykaa on Wednesday (September 29) said that its board will convene on October 3 to consider issuance of bonus shares.

“…a meeting of the Board of Directors of the company will be held on Monday, October 03, 2022, to, interalia, consider and approve the issuance of bonus shares to the equity shareholders of the Company in the ratio, as it may deem fit and seeking shareholders’ approval by way of postal ballot and such other approval(s), as the Board may deem appropriate,” Nykaa said in a regulatory filing. 

Bonus shares are additional shares issued by a company on the basis of the existing shares held by a shareholder. 

The announcement comes even as the listed beauty ecommerce platform continues to be pummeled by the negative market sentiment. Nykaa’s shares have been on a downward trajectory for the past one month. The stock closed at INR 1,277.35 on Wednesday, down 8% from INR 1,391.35 on August 30. 

From a record high of INR 2,574 back in November, the decline in Nykaa’s share prices has wiped off more than 53% of investor wealth in the last one year. Complicating the matters for the startup have been tightening monetary policies and volatile market sentiment. 

The company reported a 42% year-on-year (YoY) growth in consolidated net profit to INR 5 Cr in the first quarter (Q1) of the financial year 2022-23 (FY23). 

On a quarterly basis, net profit fell 33% from the preceding March quarter. Revenue from operations continued its upward trajectory, growing 41% YoY to INR 1,148.4 Cr in Q1 FY23. 

Gross merchandise volume (GMV) also surged 47% YoY to INR 2,155.8 Cr during the quarter, while total expenses rose more than 40% YoY to INR 1,148.4 Cr. 

Rising inflation, a growing predisposition to savings, and a reduction in discretionary spending are the major challenges before Nykaa, as highlighted by the startup in its quarterly report last month. 

However, the startup continues to make strategic investments. Earlier this month, the listed unicorn completed acquisition of digital content platform Little Black Book in an all-cash deal. 

It also appears to be ramping up its operations and presence across the country. It opened 8 new stores in Q1 FY23, taking its total physical store count to 113 across 52 cities at the end of June. 

Earlier this month, Nykaa founder and CEO Falguni Nayar emerged as India’s richest self-made woman, according to a report. Nayar is said to have a net worth of INR 38,700 Cr on the back of strong stock exchange listing of Nykaa last year.

The startup competes with the likes of Purplle, Plum, MyGlam and many others. According to an Inc42 report, the online beauty and personal care market is estimated to reach $5.6 Bn by 2025.