Nykaa hits the lowest level since listing
In an otherwise steady market, shares of FSN E-Commerce Ventures (Nykaa) fell 1% on Friday to reach a new low of Rs 1,206.90.
The stock fell to its lowest level since its IPO in November of last year, and it was down for a fourth straight day at Rs. 1,206.90, losing 6% over that time. The S&P BSE Sensex, in contrast, was up 1.8% at 58,245 points at 1:36 PM.
With this most recent decline, Nykaa’s market price has dropped 53% from its all-time high of Rs 2,574 on November 26, 2021. On November 10, 2021, the company made its stock market debut.
Currently, the company is trading 7% above its initial share price of Rs. 1,125.
FSN E-Commerce Ventures, also known as Nykaa, is a consumer technology platform that provides consumers with a lifestyle retail experience that is content-led and includes their own brand of fashion, personal care, and beauty products.
The business’s first bonus issue announcement, which it had approved on October 3 in the ratio of 5:1, or five bonus shares for every share held in the company, failed to excite the investors. The stock has dropped by over 8% since then. In the last three months, Nykaa has underperformed the market, declining 15% as opposed to the S&P BSE Sensex’s 9% gain.
Although current inflationary pressures will immediately impact consumer discretionary spending, the company asserted that fashion, beauty and personal care would continue to rise strongly over the medium and long term.
“Beauty & personal care, health, and fashion consumption is seeing a greater share of the wallet due to the increase in disposable income among younger consumers and online content-led discovery,” Nykaa stated.
Analysts predict that Nykaa, an Omni channel player from FSN E-Commerce Ventures, would increase its Beauty and Personal Care (BPC) revenue by 32.4% in CY20–25E despite a predicted fall in the online BPC market in India of 17.3% CAGR.
The company may continue to rule the online BPC market with a market share of 26.8%, driven by a large network of loyal users. As Nykaa expands its presence in India’s tier-2 and tier-3 cities, analysts at Elara Capital anticipate that the company will continue to outperform in terms of growth in the medium term.
“The main concern is intense competition from direct-to-consumer (D2C) brands in the BPC sector. There are many competitors in the fashion industry, with players like Myntra already present. The sluggish adoption of technology could result in fewer transactions, reducing income. The fashion industry is still in its infancy and may take some time to achieve positive EBITDA, “added the brokerage firm.
About Nykaa
Falguni Nayar launched the Indian e-commerce business Nykaa in 2012 and has its headquarters in Mumbai. Beauty, wellness, and fashion products are sold on its websites, mobile apps, and in more than 100 physical stores. It became the first unicorn firm in India to have a female CEO in 2020.
The company sells goods that are produced both domestically and abroad. It switched from an online-only to an omnichannel model in 2015 and started selling items other than cosmetics.
History
In April 2012, Nykaa was established by Falguni Nayar, a former managing director at Kotak Mahindra Capital Company. It was introduced as an online storefront that curated a selection of health and cosmetic products. The Sanskrit word nayaka, which means actress or “one in the spotlight,” is where the company name Nykaa originates. The website was initially introduced during Diwali in 2012 and made commercially available in 2013.
The business switched from an online-only to an omnichannel model in 2015 and started selling fashion items.
The business opened Nykaa Man, India’s first multi-brand online store for men’s grooming, in October 2020. The business entered the fashion industry by establishing Nykaa Design Studio, later known as Nykaa Fashion.
The company introduced Nykaa PRO in 2020. Users of this premium membership programme receive exclusive access to deals and professional beauty items through the company’s App. Nykaa Fashion opened its first store in Delhi in December 2020, making the fashion industry multichannel.
Fundraising and IPO
Nykaa has raised money through many rounds of fundraising since 2012. It received 100 crore (US$13 million) in funding from Steadview Capital in March 2020, elevating its unicorn startup valuation to 85 billion (US$1.1 billion). Steadview then provided a further 67 crore (US$8.4 million) investment in May 2020. Through secondary finance, two Bollywood actresses bought stock in the business.
In the business, Katrina Kaif contributed 2.04 crore (US$260,000) in 2018, while Alia Bhatt contributed 4.95 crore (US$620,000) in July 2020. Through the secondary sale of shares from an existing equity investor in November 2020, multinational asset management organisation Fidelity invested in the business.
On October 28, 2021, Nykaa began its first IPO. The IPO raised $5,352 crore (US$670 million) at a valuation of US$7.4 billion after being oversubscribed 81.78 times. On November 10, 2021, the company went public on the NSE and BSE. Its price increased by 89.2% on opening day, putting the firm at nearly US$13 billion. Falguni Nayar, the company’s founder, rose to become India’s richest self-made female billionaire after acquiring a 53.5% interest in the business. By May 2022, the company’sshares were as high as ₹1,390 apiece on the BSE.
Operations and services
The company has an inventory-based business model with warehouses in Mumbai, New Delhi, Pune, Haryana, Kolkata, and Bangalore. Seventy-six brick-and-mortar stores spread around the nation make up its offline presence in 2020, in addition to its principal e-commerce operation. Over 200,000 goods from 2,000 manufacturers are purportedly available.
Its three offline retail styles are known as Nykaa Luxe, Nykaa On Trend, and Nykaa beauty Kiosks. Along with Nykaa Beauty, the in-house line of beauty items, the Luxe format contains high-end international brands, including Huda Beauty, MAC, Dior, and Givenchy. Products in the Nykaa On Trend format are categorised based on how well-liked they are.
International brands, including e.l.f, Charlotte Tilbury, Tonymoly, Becca, Sigma, Limecrime, Dermalogica, and Murad, are only available through Nykaa as a retailer in India.
Partnerships and acquisitions
Nykaa purchased a private women’s styling platform called 20Dresses.com in May 2019. The same year, it partnered with actress Katrina Kaif to develop its first celebrity-endorsed brand, Kay Beauty.
Pipa Bella, an Indian fashion jewellery company, and Dot & Key, an Indian skincare company, were both purchased by Nykaa Fashion in 2021.
The company bought an 18.51% stake in Earth Rhythm, a cosmetics company, in 2022. Indian skincare company Earth Rhythm strives to provide customers with innovative and secure skincare solutions.
Security and privacy issues
Internal Nykaa Fashion systems were found to have an API weakness on November 18, 2019, which may have allowed a potential attacker to access any user account provided they had the user’s email address. Data about users may have been in danger as a result of this. As a result, the business addressed the security flaw.
Future Plans
According to CEO Falguni Nayar, Nykaa plans to triple the number of its physical locations to 300 to increase its presence offline. To open outlets in the top 100 cities, the business plans to invest 100 crores over the next two to three years.
Corporate social responsibility
Nykaa provides social and financial support to issues like crisis management, women’s empowerment, rural development, and health. It has major CSR collaborations with organisations, including SPARSH India, CARE International Confederation, PRIDE, Milaap, Nanhi Kali, Make a Wish Foundation, Benefactory, Sneha, GiveIndia, and PM CARES Fund.
Activities
The “Nykaa Femina Beauty Awards” have been held by the company since 2015 in collaboration with the women’s lifestyle publication Femina (India).
Together with Vogue India, Nykaa Fashion debuted “The Power List” in 2019.
edited and proofread by nikita sharma
