Indian beauty startup Nykaa files for IPO, reveals it turned profitable in FYE 2021

FSN E-Commerce Ventures, the parent firm of the Indian beauty startup Nykaa, has filed a draft red herring prospectus (DRHP) with the securities and exchange board of India (SEBI) ahead of its initial public offering.

The company didn’t disclose the total size of the IPO but confirmed in its filings that it would offer fresh equity worth 5.2 billion rupees (US$70 million) and 43.1 million secondary shares of existing shareholders and promoters.

However, according to a Reuters report that cited sources with direct knowledge of the matter, the company plans to raise US$500 million via the IPO.

A recent Bloomberg report noted that the IPO could value the beauty startup at more than US$4 billion.

The Nykaa team

Nykaa revealed that it had turned profitable for the first time in the financial year ended on March 2021, bringing in a net profit of 619.5 million rupees (US$8 million). This year, its revenue grew by 38% to 24.5 billion rupees (US$330 million).

In FYE 2020 and FYE 2019, Nykaa reported net losses of 163.4 million rupees (US$2 million) and 245.4 million rupees (US$3 million), respectively.

Photo credit: Nykaa

The filings also show that the company plans to use the proceeds from the IPO to invest in its subsidiaries, FSN Brands and Nykaa Fashion, to set up new retail stores. It also aims to use the capital for the repayment or prepayment of outstanding loans and increase the visibility and awareness of its brands, among others.

Founded in 2012, Nykaa operates both online and offline retail stores. Its catalog includes makeup, skincare, haircare, fragrance, and personal care items, among others.

According to Crunchbase, Nykaa has raised a total of US$341.9 million in funding over 13 rounds to date. Last November, it raised an undisclosed sum from Fidelity Investments, which came after the startup banked nearly US$22.5 million from hedge fund Steadview Capital at a valuation of US$1.2 billion in March 2020.

Nykaa’s pursuit for an IPO follows Zomato’s successful listing, which was oversubscribed 38.25 times.

See also: 8 takeaways from Zomato’s investor deck for its $1.3b IPO