Nykaa IPO - Information Note
FSN E-Commerce, the company that owns and operates the Nykaa digital brand, proposes to come out with an IPO of Rs.5,352 crore. The issue opens on 28-October and closes for subscription on 01-November. Nykaa is a digital platform that offers an agnostic market place for beauty products, healthcare products, apparel and accessories. It offers a one-stop shop for a range of brands across a plethora of price points.
FSN E-Commerce Ventures was promoted by Falguni Nayar, the former head of investment banking at Kotak Mahindra Capital. Falguni was also an independent director on the board of Tata Sons. FSN E-Commerce Ventures was floated in 2012 and it has emerged as one of the few profitable digital specialized ecommerce properties in India.
Below are the terms which you should know about Nykaa IPO
Key terms of the IPO issue of FSN E-Commerce Ventures (Nykaa)
|
Key IPO Details |
Particulars |
Key IPO Dates |
Particulars |
|
Nature of issue |
Book Building |
Issue Opens on |
28-Oct-2021 |
|
Face value of share |
Rs.1 per share |
Issue Closes on |
01-Nov-2021 |
|
IPO Price Band |
Rs.1,085 - Rs.1,125 |
Basis of Allotment date |
08-Nov-2021 |
|
Market Lot |
12 shares |
Refund Initiation date |
09-Nov-2021 |
|
Retail Investment limit |
14 Lots (168 shares) |
Credit to Demat |
10-Nov-2021 |
|
Retail limit - Value |
Rs.189,000 |
IPO Listing date |
11-Nov-2021 |
|
Fresh Issue Size |
Rs.630.00 crore |
Pre issue promoter stake |
54.22% |
|
Offer for Sale Size |
Rs.4,721.92 crore |
Post issue promoters |
52.56% |
|
Total IPO Size |
Rs.5,351.92 crore |
Indicative valuation |
Rs.53,204 crore |
|
Listing on |
BSE, NSE |
HNI Quota |
15% |
|
QIB Quota |
75% |
Retail Quota |
10% |
Data Source: IPO Filings
Here are some of the key merits of the FSN E-Commerce Ventures (Nykaa) business model
a) Nykaa has a diverse portfolio of beauty, fashion and personal care products
b) It is the only digital profit making ecommerce venture in India
c) Provides a platform for leading national and international brands
d) Nykaa Vertical offers a platform for beauty and personal care products
e) Nykaa Fashions Vertical offers a platform for apparel and accessories
f) Nykaa combines proprietary brands, white labelled brands and external brands
Also Check - Nykaa IPO - 7 Things to know before applying for IPO
How is the FSN E-Commerce Ventures (Nykaa) IPO structured?
The IPO will be a combination of a fresh issue and an offer for sale. Here is a gist of the IPO offer of the company.
a) The fresh issue component will entail the issue of 56 lakh shares and at the peak price band of Rs.1,125 per share, the fresh issue amount will be Rs.630 crore.
b) The OFS component will comprise of the issue of 4,19,72,660 shares and at the peak price band of Rs.1,125, the OFS value would be Rs.4,722 crore resulting in a total IPO issue size of Rs.5,352 crore.
c) The Falguni Nayar family trust will offer 48 lakh shares as part of the OFS and as a result the promoter stake will come down marginally from 54.22% to 52.56%, although they will still retain their majority ownership.
Apart from the promoter group, other early investors including PE funds and family offices will also be participating in the offer for sale. At the upper end of the price band, FSN E-Commerce Ventures (Nykaa) will be valued at Rs.53,204 crore.
Financials of Nykaa
|
Financial Parameters |
Fiscal 2020-21 |
Fiscal 2019-20 |
Fiscal 2018-19 |
|
Sales Revenues |
Rs.2,452.64 cr |
Rs.1,777.85 cr |
Rs.1,116.38 cr |
|
Net Profit |
Rs.61.95 cr |
Rs.-16.34 cr |
Rs.-24.54 cr |
|
Total Assets |
Rs.1,301.99 cr |
Rs.1,124.48 cr |
Rs.775.66 cr |
|
Net Profit Margins |
2.53% |
-0.92% |
-2.20% |
|
Asset Turnover (X) |
1.88 times |
1.58 times |
1.44 times |
Data Source: Company RHP
One of the selling points for Nykaa has been that they have been among the rare profitable digital ecommerce plays in India. Nykaa has not only reported a profit in FY21 but also in the Jun-21 quarter, albeit small. The bigger advantage for Nykaa is the asset light model, which is evident from the robust asset turnover ratios, which has shown a consistently rising trend over the last 3 financial years.
Investment Perspective for FSN E-Commerce Ventures (Nykaa)
Nykaa will be the biggest digital IPO after Zomato raised Rs.9,375 crore and got a whopping 38 times oversubscription.
Here are some key valuation pointers for Nykaa.
a) The profit trend and the healthy asset turnover ratios will work in favour of Nykaa since loss making digital plays are getting significantly higher valuations in the market.
b) It has a fantastic portfolio of products. In beauty and personal care, Nykaa offers 1.97 lakh SKUs (stock keeping units) across 2,476 brands while in the apparel and accessories segments, it offers 18 lakh SKUs across 1,350 brands.
c) Nykaa is betting on the Omnichannel experience which will combine offline, online, proprietary brands, external brands, pull strategy and push strategy for sales.
d) The fresh issue proceeds will be allocated towards debt repayment, investment in brands, investments in store expansion and in storage warehousers. All these are expected to be value accretive for the stock overall.
While traditional valuation parameters may still not be applicable, its profitable turn and high asset turnover ratios will favour valuations post listing. Nykaa promises to be a good play on the emerging trend of higher-end brand consumption online.
Nykaa IPO - details explained
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