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Deepti Sri · · 9 min read8 shades of Nykaa’s pre-IPO presentation
Few would have bet that a fashion and beauty startup would turn profitable amid a pandemic that forced people to stay indoors. Helmed by ex-investment banker Falguni Nayar, Nykaa is set to be India’s first woman-led unicorn to debut in the stock market.
Photo credit: Nykaa
Nykaa’s initial public offering, which could propel its valuation to US$7.1 billion, stands out for several reasons.
Founded in 2012, the company is the youngest unicorn to file for a public listing this year. It’s also one of the few IPO-bound Indian startups that is profitable.
According to web analytics company Similarweb, Nykaa is the most visited website among beauty-only retailers in India. The company holds about 30% of the country’s market share in beauty products.
Parent firm FSN E-Commerce Ventures is set to capitalize on Nykaa’s growth and will keep public subscriptions open from October 28 to November 1.
The listing consists of a fresh issue of shares worth 6.3 billion rupees (US$84 million) and an offer for sale of US$630 million worth of equity shares by the promoters and existing backers.
Nykaa has received bids for 40x the number of shares it plans to sell to anchor investors, including investment firm Blackrock Capital and asset manager Fidelity. The total IPO size works out to nearly US$714 million.
The trade debut comes amid a flurry of big-ticket IPOs in India, including the likes of Zomato, Paytm, and Oyo. Tech in Asia looked into Nykaa’s investor deck and its filings with the Securities and Exchange Board of India (SEBI), and here’s what caught our eye:
1. Its revenue shines
Nykaa, which has an online platform as well as retail stores, has posted a nearly 40% jump in revenue from operations, hitting US$325 million in the financial year ended (FYE) ended March 2021.
The company attributed this to an uptick in demand for its products as well as the launch of multiple product categories and brands.
It may have also benefited from the “lipstick effect,” which refers to how consumers spend money on small indulgences during times of financial crisis.
That said, “at the height of the pandemic, the company’s consolidated gross merchandise value (GMV) slid to US$59 million in the first quarter of FYE 2021,” noted Nykaa founder and CEO Falguni Nayar in a pre-IPO presentation.
2. Beauty pays, but fashion flourishes
3. A profitable Indian unicorn
4. More cash in the pocket
5. Curbing expenses
6. Ecommerce roll-up in the future?
7. Still hungry for more
8. Foundation for the future
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The beauty retail major – the first profitable Indian unicorn to go public – gives a glimpse into its earnings and its plans for the future.
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