Nykaa IPO Opens Today: The much awaited initial public offering (IPO) of FSN E-commerce Ventures, which own popular beauty and wellness product online marketplace Nykaa, is all set to open for subscribers on Thursday, October 28. The Rs 5,352-crore public issue will be for investors from October 28 to November 1. The shares in Nykaa IPO will be a mix of fresh stock and an offer for sale. India’s biggest e-tailer of cosmetics has fixed the price band of the IPO at Rs 1,085-1,125 apiece. At upper price band of Rs 1,125, Nykaa IPO coul raise up to Rs 5,352 crore from the issue.
Nykaa IPO: Key Strengths
Nykaa is the largest specialty beauty and personal care (BPC) retailer in India in terms of value of products sold in the financial year 2021. It is one of the fastest growing fashion platforms in India based on gross merchandise value growth.
It’s inventory-led business model for beauty and personal care product helped Nykaa to grow as one of the few profitable e-tailers in India today. This unique business model allows the company to “offer authentication for all its products and ensures availability and efficient distribution," believes analysts at Motilal Oswal. Apart from vast online presence, it also has 80 physical stores across 40 cities in India. This omnichannel approach has strengthen Nykaa’s robust distribution network and seamless experience for its customers.
Nykaa IPO Valuation
“The IPO is being valued at price/sales of 21.0-21.8x FY2021 revenues of Rs 2,441 crore. The company has also posted strong revenue CAGR of 48.2 per cent between FY2019-20 despite the Covid crisis and register a profit in FY2021. While valuations may appear to be expensive on a P/E basis Nykaa is one of the very few profitable unicorns in India and we believe that the company is well positioned to benefit from the exponential growth in the online beauty and
fashion retailing business over the next decade," said Angel One in a note.
Nykaa IPO: Should you Subscribe?
“Nykaa is bringing the issue at price band of Rs 1,085-1,125 per share at EV/Sales multiple of 16x. Nykaa has a large BPC market opportunity growing at 12 per cent per annum by 2025 & fashion opportunity is expected to grow at
18 per cent per annum by 2025. Also company has posted strong growth without a substantial cash burn. The beauty brand has posted profits
along with strong improvement in capital turnover ratio from 3.1 times in the financial year 2019 to 4.2 times in the financial year 2021. This shows that company have focused on capital efficiency and unit economics, while simultaneously building for scale and growth. Hence, looking after scale of operations, strong management team, profitable concern & high growth prospects in industry due to large underpenetration, we believe that company has created, an industry itself," said Hem Securities in a note.
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