Nykaa investment committee approves $2.5 million investment in UAE arm, Nysaa Beauty

FSN E-Commerce Ventures, the parent company of fashion and beauty products platform Nykaa, announced on February 1 that its Fundraise & Investment Committee of the Board of Directors had approved an investment proposal by Nessa International Holdings Limited into its recently formed United Arab Emirates-based multi-branded beauty retail operation business Nysaa, according to an exchange filing.

Nysaa Beauty LLC is a subsidiary of Nessa International Holdings Limited. The investment corpus according to the proposal will amount to USD2.5 million and it will be invested in one or more tranches, the filing added.

The equity shares of Nysaa Beauty LLC by Nessa International will be acquired at a price of AED 1000 per share.

The e-commerce brand's shares witnessed a 52-week high on January 10, when they traded at ₹195.40 apiece. The company enjoys a market capital of ₹46,578.67 crore as of February 1, according to the BSE website.

Mint earlier reported in 2023,  that the relatively newer fashion business is finally adding oomph to FSN E-Commerce Ventures Ltd, the parent company of Nykaa. This vertical put up a strong show on the margin front in the September quarter (Q2FY24), thanks to premiumisation, lower product returns and declining marketing expenses. As such, the fashion segment clocked a multi-quarter high contribution profit margin (as a percentage of net sales value) of 4.7%. In Q1, this measure stood at 2.7%. Contribution profit refers to gross profit after adjusting variable expenses such as fulfilment expenses, marketing costs, and selling and distribution expenses.

Meanwhile, in the Q3FY24 business update, the company projected mid-twenties growth in the gross merchandise value (GMV) of its beauty and personal care vertical, with a net sales value (NSV) growth of approximately 20% on a year-on-year (YoY) basis, as reported by Mint earlier in January.

Additionally, the company expects the fashion vertical's GMV to grow by around 40% in the quarter, with NSV growth in the low thirties on a YoY basis. The company believes that its beauty and personal care (BPC) growth for the quarter outpaces industry growth. However, it notes that current industry growth is below the long-term trajectory and anticipates a return to the median in the near to mid-term, driven by a robust macroeconomic and demographic outlook.