FSN E–Commerce Ventures Limited IPO (Nykaa IPO)

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(i) Incorporated in 2012, Nykaa has a diverse portfolio of beauty, personal care and fashion products, including its owned brand products manufactured by it.

(ii) Modes of business:
Online: Its online channels include mobile applications, websites and mobile sites.
Offline: Its offline channel comprises of 73 physical stores across 38 cities in India over three different store formats.

(iii) Business verticals:
Nykaa: Beauty and personal care
Nykaa Fashion: Apparel and accessories

(iv) Its beauty and personal care offering is extensive with 197,195 SKUs from 2,476 brands primarily across make-up, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories. It manufacture its owned brand beauty and personal care products through third party manufacturers contracted. Such products which are sold under its owned brands such as “Nykaa Cosmetics”, “Nykaa Naturals” and “Kay Beauty”. Its owned brands are available on its online and offline channels, as well as for certain brands at third party retailers.

(v) Launched Nykaa Fashion in 2018, as a curated and managed marketplace with an endeavor to inspire consumers to make fashion and lifestyle choices that best suit them. Within these consumer divisions, it merchandise across several categories including western wear, Indian wear, lingerie, footwear, bags, jewellery, accessories, athleisure, home décor, bath, bed and kitchen in order to cater to the diverse consumers’ journeys across its platform.

Competitive Strengths
(i) India’s leading lifestyle focused consumer technology platform
(ii) Proprietary technology stack
(iii) Consumer loyalty

Objects of the FSN E–Commerce Ventures Limited IPO (Nykaa IPO):

The Offer comprises the Fresh Issue and an Offer for Sale, Net proceeds from fresh issue will be used in: 1. Investment in certain of its Subsidiaries, namely, FSN Brands and set-up of new retail stores 2. Capital expenditure to be incurred by the Company and investment in certain of its Subsidiaries, namely, Nykaa E-Retail, Nykaa Fashion and FSN Brands for funding the set-up of new warehouses 3. Repayment or prepayment of the borrowings 4. Expenditure to enhance the visibility and awareness of the brands 5. General corporate purposes
DRHP of FSN E–Commerce Ventures Limited IPO (Nykaa IPO)
RHP of FSN E–Commerce Ventures Limited IPO (Nykaa IPO)

FSN E–Commerce Ventures Limited IPO (Nykaa IPO) Details:

Open Date: Oct 28 2021
Close Date: Nov 01 2021
Total Shares: 4.75 Crores
Face Value: ₹ 1 Per Equity Share
Issue Type: Book Building
Issue Size: 4000 Cr.
Lot Size: 12 Shares
Issue Price: ₹ 1085-1125 Per Equity Share
Listing At: NSE,BSE
Listing Date: Nov 11 2021

Promoters And Management:

(i) Falguni Nayar, is the founder, Executive Chairperson & Managing Director and Chief Executive Officer of the Company. She holds a post-graduate diploma in management from the Indian Institute of Management, Ahmedabad. She has over 26 years of experience in e-commerce, investment banking and broking. Prior to founding the Company, she was associated with Kotak Mahindra Capital Company Limited for 18 years where she also served as a managing director. She has also served on the boards of various companies, including Tata Motors Limited and Aviva Life Insurance Company India Limited Presently, she serves as an independent on the boards of various companies including, Kotak Securities Limited, ACC Limited and Dabur India Limited. (ii) Sanjay Nayar, is an Additional Non-Executive Director of the Company. He holds a bachelor’s degreein science in mechanical engineering from the University of Delhi and a post-graduate diploma in management from the Indian Institute of Management, Ahmedabad. He has over 35 years of experience in the banking, and private equity. He was associated with Citibank N.A. for over 23 years, where he also served as the as chief executive officer of the bank in India over six years. (iii) Adwaita Nayar, is an Executive Director of the Company, since July 1, 2021. She also serves as the chairperson and chief executive officer of Nykaa Fashion. She co-founded the Company and has been involved in the areas of marketing, operations and product development. She holds a bachelor’s degree in applied mathematics from the Yale University where she graduated Cum Laude and a master’s degree in business administration with distinction from the Harvard Business School.

Financials of FSN E–Commerce Ventures Limited IPO (Nykaa IPO):

Particulars (Million) Mar 21 Mar 20 Mar 19
Revenue 24,408 17,675 11,113
Cost of material consumed 382 173 2
Purchase of traded goods 14,956 11,787 7,852
Change in inventories -460 -1818 -1252
Employee Benefit Expenses 2,836 1,956.00 1,172
Other Expenses 5,079 4,766 3,133
Operating Profit 1,615 811 206
OPM % 6.62% 4.59% 1.85%
Other Income 117 103 49
Depreciation & Amortisations 671 595 308
Financial Cost 307 442 263
Profit Before Tax 753 -124 -317
Net Profit 597 -162 -242
NPM% 2.45% -0.92% -2.18%
EPS 41.66 -11.63 -17.7

Comparison With Peers:

There are no listed companies in India that engage in a business similar to that of this Company.

Recommendation on FSN E–Commerce Ventures Limited IPO (Nykaa IPO):

Review and Recommendation of Nykaa IPO by InvestorZone is 5/10 1. Nykaa in the last 3 years has shown tremendous growth. The revenue has doubled in the last 3 years. 2. Nykaa in the FY20-21 has come in profitability. This year they have shown profit of 60 Crores which is very rare among the startups in the initial days. 3. Company is led by a great management. 4. Nykaa is an inventory led model which has helped company to maintain quality, this business model is exactly opposite to Amazon and Flipkart, which are basically a market place. 5. The valuation at Rs. 1105 comes out to be 53100 Crores. Mcap/Sales = 22x which looks stretched. However, as this is bull market going on, so chances of good listing gain possible.

Lead Manager of FSN E–Commerce Ventures Limited IPO (Nykaa IPO):

  1. ICICI Securities Limited
  2. JM Financial Consultants Private Limited

Registrar of FSN E–Commerce Ventures Limited IPO (Nykaa IPO):

  1. Link Intime India Private Limited

Company Address:

104, Vasan Udyog Bhavan, Sun Mill Compound, Tulsi Pipe Road, Lower Parel, Mumbai 400 013, Maharashtra, India Telephone: + (91) 22 6614 9616

Discussion on FSN E–Commerce Ventures Limited IPO (Nykaa IPO):

12 Comments

    Fashion business contributes to 25% of GMV of Nykaa as in FY21
    • 90% GMV from beauty business comes from online platform and 90% of online comes from the app
    • Tier 1 accounts for 45%/40% topline and remaining topline is from tier 2 and 3 towns
    • Orders grew 10% QoQ and 200% YoY to 5.9mn units in the quarter
    • Average order value stands at 1800/per order under beauty business
    • Nykaa fashions has an order value of 3190/per order
    • The company runs on a market-based model vs inventory-based model under beauty business
    • Beauty is an inventory-based (buy on spot and hold stock) vs fashion is market-based business model (only run stock when demand arises)
    • Nykaa has had certain exclusive tie-ups with beauty brands i.e. Huda Beauty for a year or so
    • The company has 3000+ influencers in order to create content in line with demand strategy
    • The company has gross margins as combo on own and other brand margins and certain input of the advertisement component
    • The company has 80 physical stores across 40 cities and under online company has over 25,000 brands
    • Company believes in delisting brands/pieces under fashion business on a monthly basis while beauty business sees a very low churn rate
    • On the beauty business side most of the revenues (80%) come in from the mass market products
    • The company has increased the offer by 20% to 630 crores in order to repay high cost debt and to fund expansion of warehouses and physical stores and also spend more on A&P
    • The stores are company owned and have 2 formats which is ‘On Trend’ 800 square feet and ‘Lux’ is around 1150 square feet
    • The life of assets is around 3 to 5 years and capex spend is roughly 4000/square feet to 5000/square feet
    • The company has own brands making up 7.5% YTD of total revenues on a blended average basis
    • Old inventory does not remain a major issue as Nykaa has a brand agreement with suppliers

    Reply

    Current GMP is Rs. 660……So, good listing gain is expected..

    Reply

    As on 31.08.2021, they have 82 Physical Stores in India. However, 94% income of Nykaa comes from Online Stores.

    Reply

    Nykaa has clocked a revenue from operations of ₹2440 Crores in Financial Year 2021 and the contribution to the GMV sales in Tier 2 and Tier 3 cities collectively is around 62.6%…

    Reply

    If you see the Balance-Sheet of Nykaa, you will find it is Inventory led model. Unlike other e-commerce players like Amazon, or Flipkart which only connects buyer and seller and take commission, Nykaa sold only tested products by keeping those inventories in the books.

    This a risky business model as sometimes inventory led models may pose issues in case of change in price of products. However, the segment like Beauty and Personal care which requires good quality products have been quite successful for Nykaa under inventory led model, as they control the quality with that model.

    Today, Nykaa is a first e-commerce company which is profitable and will attract lot of investors.

    Reply

    NYKAA IPO

    1st profitable e-comm co gets higher valuation👇

    Valuation likely at Rs.53,204 crs ( $7bn) vs Earlier reports indicated valuation of $4-5bn

    At $7bn
    IPO priced at trailing FY21
    *20x sales
    *330x EV/Sales

    Reply

    If we purchase 1 share of Adani Enterprise then eligible for applying in shareholder quota.

    Reply

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