Nykaa IPO subscribed over 80 times, retail segment 12.2 times

The initial public offering (IPO) of FSN E-Commerce Ventures Ltd, which runs online marketplace for beauty and wellness products Nykaa, was subscribed more than 82 times at the end of the final day of bidding. Ahead of its IPO, Nykaa raised ₹2,396 crore from anchor investors. The issue was fully subscribed on the first day of the sale.

According to BSE and NSE cumulative bid data as of 5:00 pm today, QIB segment was subscribed 92 times; HNI 112.51 times; retail 12.29 times and employees 1.88 times. 

The IPO comprises fresh issue of equity shares worth ₹630 crore and an offer for sale (OFS) of 41,972,660 equity shares by promoter and existing shareholders.

As per market observers, Nykaa shares are available at a premium (GMP) slipped from previous day but still remains strong around ₹570 in the grey market today. The company's shares are expected to list on leading stock exchanges NSE and BSE on November 11.

“Looking after scale of operations, strong management team, profitable concern & high growth prospectsin industry due to large under penetration, we believe that company has created an industry itself. Therefore, we recommend “Subscribe" on issue for listing gain as well as long term," suggested Hem Securities.

Founded in 2012 by former investment banker Falguni Nayar, as of August 31, 2021, Nykaa had cumulative downloads of 55.8 million across all their mobile applications. Nykaa had posted a net profit of ₹61.9 crore in FY21 compared to a loss of ₹16.3 crore in FY20. Nykaa opened their first physical store in 2014, and has 80 physical stores across 40 cities as of August 31, 2021.

The company plans to use the proceeds from the IPO for expansion, by setting up new retail stores and establishing new warehouses. It also plans to retire some of its debt, which should bring down interest costs and further shore up its profitability.

Brokerage firm Prabhuas Lilladher has recommended a ‘Subscribe’ Rating to IPO of FSN E-Commerce Ventures which operates Nykaa. “We believe Nykaa’s entry into fashion segment holds promise with focus on premium customers, curated and managed marketplace offering over 1.8 million SKUs, private labels like NYKD, Pippa Bella, 20 dresses and industry leading AOV of ₹3977 and ~25% contribution to GMV in 5MFY22," the note stated.