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Nykaa is coming up with an IPO
25-Aug-2021

 

FSN E–COMMERCE VENTURES LIMITED, a Beauty retailer company which operates Nykaa is coming up with an IPO; IPO is having a fresh issue of Rs 525 crore and an offer for sale (OFS) of more than 4 crore (43,111,670) shares.

About company

Nykaa is one of the India’s largest Omni-channel beauty destination with millions customers across the country. Nykaa is founded by Falguni Nayar in 2012. Nykaa sells other global leading brands and domestic on its online and offline stores, company sells more than 2 lakhs products of more than 2500 brands like Rahua, Lotus Botanical, Maybelline Newyork, lakme Reinvent and the products of Katrina Kaif’s brand Kay beauty etc and also Katrina Kaif and Alia Bhatt is one of the investors of the company. Nykaa offers a comprehensive selection of makeup, skincare (Moisturizers, Cleansers, Eye care, Body care), hair care (Shampoo, Oil, Conditioner, serum), fragrances (perfumes, body mists, deodorant), and personal care (shower gels, body wash, Scrubs), luxury (branded products) and wellness (Vitamins, calcium ) products for women and men. Company also operates on online market, company is having its own application named Nykaa, which is having a 43.7 million downloads here they provide the premium products to the customer. Nykaa is having more than 68 Luxe and On-Trend Stores with 1200+ brands and 18 warehouses across India on 38 cities.

Industry Growth and Overview

India’s beauty and personal care market size was at Rs 868 Billion, which has grown by 13% CAGR in 2019 to Rs 1,267 Billion and as per the report of RedSeer Research it is projected that this market will grow at 12% CAGR by 2025 to Rs1,981 Billion.


Company’s Strength-

  • Nykaa is one of India’s leading lifestyle focused consumer technology platform and company is largest specialty beauty and personal care platform in terms of value of products sold on FY21.
  • Company’s chairman and CEO is Falguni Nayar who served as a Managing Director of kotak Mahindra Capital and also served as a board member for many companies like Aviva insurance, Dabur India, and others. She has served as an independent board member of TaTa motors in the past. She has had a very successful career as a banker and having a good knowledge of finance, as Indian fashion industry was not having any fashion brand till 2012, Falguni Nayar has thought a right time to open an Indian brand.
  • Company is having a strong growth and profitability; here is the capital turnover ratio.
  • Company is having a very good relation with global brands, through which company provides wide range of products to the customers.
  • Company has a very strong people network; company has a YouTube account which is having more than 1 million subscribers.
  • Company has successfully acquired 20Dresses.com which is a private women’s styling platform in 2019 and in 2021 Pipa Bella which is Indian fashion jewelry brand has acquired successfully by Nykaa. 
  • Company is good to maintain its customers for long term, and generates high GMV from its existing customers-
  • Company has reduced its percentage of revenue on advertising and advertisement.

Financial performance-

Particulars

          FY19

            FY20

              FY21

GMV

        1,650

        2,684.9

          4,046.0

Revenues

        1,116.4

        1,777.8

          2,452.6

PAT 

            -               24.5  

          -             16.3

               61.9

                                                                                                                                                     Amount is in INR crore

Risk Factors-

  • Company is highly dependent on external brands. The top three external vendors have accounted 24.4% of its GMV in FY21. If any of these walkouts it may affect company’s revenue.
  • The company is not having any contractual commitments from its partner brands to sell exclusively on its platform.
  • The company faces huge competition from online fashion seller like Myntra, Amazon and on beauty and personal care market space, Amazon and Flipkart is having huge market.
  • Company relies on third party for making its branded products and for delivery of its products.
  • Company is having a huge dependency on Falguni Nayar.

Why company coming up with an IPO?

  • Company is to invest Rs 35 crore on new retail stores.
  • Company may expand its warehouse facility by Rs 35 crore.
  • Company is to pay Rs 130 crore for its previous borrowings.
  • Company will spend Rs 200 crore in promotions to increase brand visibility and brand awareness.
  • And few proceedings will be utilized for General corporate purposes.