Bids can be made for a minimum of 12 equity shares and in multiples of 12 equity shares thereafter.
FSN E-Commerce Ventures Limited, which operates online beauty e-commerce platform Nykaa, on Monday said it has fixed a price band of ₹1,085-₹1,125 per share for its initial public offer (IPO) that opens for subscription later this week.
The IPO will open for subscription on October 28 and conclude on November 1. It comprises of equity shares aggregating up to ₹630 crore (fresh issue) and an offer for sale of up to 4,19,72,660 equity shares being offered by the selling shareholders (offer for sale or OFS), a statement said.
Bids can be made for a minimum of 12 equity shares and in multiples of 12 equity shares thereafter. The offer includes a reservation of up to 2,50,000 equity shares for purchase by eligible employees, it added.
The company is reportedly seeking a valuation of over $7 billion. Existing investors such as TPG Growth IV SF Pte, Lighthouse India Fund and others are expected to offload their shares in the IPO.
Promoters, including founder and CEO Falguni Nayar, currently own more than 50% share in the company.
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Nykaa had posted a net profit of ₹61.9 crore in FY21 compared to a loss of ₹16.3 crore in FY20. Its total income stood at ₹2,452.6 crore in FY21 as against ₹1,777.8 crore in FY20.
“We are one of India’s leading consumer technology platform… (with) more than three million SKUs from 4,000-plus brands and 13 million cumulative transacting consumer base…We do believe that there is a significant headroom available for growth at each level across India’s digital use case funnel,” Nykaa Executive Chairperson, MD and CEO Falguni Nayar said in a briefing.
She explained that while the access to internet is very high at 660-690 million consumers, the online shopper base is still at just 150-180 million.
“This, we believe, is likely to go up over the next five years, with penetration reaching 24-28% of the consumer base…beauty (segment) which is a $16 billion business is likely to grow to a $28 billion business going forward, and fashion which is a $54 billion business today is likely to become $124 billion business by 2025,” she stated.
Founded in 2012, Nykaa is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers. It has a diverse portfolio of beauty, personal care and fashion products, including its own brand products manufactured by third party manufacturers.
In FY2021, 17.1 million orders were placed on Nykaa’s platform for beauty and personal care products with a total GMV of ₹33,804.1 million, a 35.3% increase over FY2020.
Apart from its online presence, the company also has 38 Luxe stores, 32 On-trend stores and 9 kiosks.
Asked about contribution from offline retail, Nykaa CEO (Beauty E-commerce) Anchit Nayar said pre-pandemic, about 8-10% of the company’s business came from physical retail.
“I think longer-term as we look to continue be very bullish on physical retail, we (will) continue to expand our physical store network and get to triple digits, we think that longer term steady state that business can contribute anywhere from 12 to 15% of the total business,” he said.
He added that while physical retail channel will make double-digit contribution in the long term, e-commerce will continue to be the larger part of the overall business.
The company proposes to use the proceeds from the IPO towards acquiring and retaining customers by enhancing the visibility and awareness of its brands, repayment of outstanding borrowings availed by the company and one of its subsidiaries, setting up new retail stores and setting up new warehouses.
On acquisitions, Falguni Nayar said the company will “always be retailer first”, bringing international and Indian brands to consumers.
“We will be a house of brands with a range of brands across beauty and fashion, that will contribute to a fair percentage of net revenue,” she added.
The GMV contribution of own brands of Nykaa was about 8% in FY21 and 7.5% in the first quarter of this fiscal.
Nykaa is also keen on international expansion. “At the moment, we are very keen to go into Middle East where we think there is a lot of affinity to Indian consumption, and in the Middle East we want to take many of our Indian brands, we want to export to these markets like including Kay beauty which could do very well into these markets as well as the U.K. Europe is another area of opportunity, but we’re going to start with the U.K.,” she said.
Pathak said during the pandemic, the company lost some amount of business towards the end of March 2020 and April and May were constrained by the lockdown that allowed the company to only sell essentials.
The company quickly pivoted to a very personalised model, where depending on the customer’s location that the platform would show relevant products and “through that we build back up our business momentum over the next one or two quarters”, she added.
“Coming into the second half of the year, we continued our growth momentum and tried to get back into the groove from customer acquisition perspective.
“And this year, in spite of COVID wave two being there, we believe that because the lockdowns were not nationwide, we could continue our growth momentum where our beauty and personal care business grew 12% q-o-q inspite, and fashion business grew 43% q-o-q,” she noted.
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