FSN E-Commerce Ventures IPO Review | Nykaa IPO Review

FSN E-Commerce Ventures IPO (Nykaa IPO) envisages to raise ₹5,352-crore. The IPO comprises a fresh issue of ₹630 crore and an offer for sale of ₹4,721.92 crore by over a dozen selling shareholders including promoters and investors. The price band for the offer has been fixed at ₹1,085-1,125 per share. The success of Zomato IPO and large online opportunity in India is attracting more players to the raise funds from the Capital Markets. This time it is FSN E-Commerce Ventures Ltd, the parent company of online beauty and fashion e-commerce platform.


Video Presentation:

FSN E-Commerce Ventures Limited (Nykaa) IPO Details:

IPO Opens28th October, 2021
IPO Closes1st November, 2021
Face Value (₹)₹ 1/- 
Issue Size (shares)Fresh Issue of upto ₹ 630 Cr + OFS of 41,972,660 Equity Shares
Issue Size (₹ Cr)₹ 5,182 – 5,350 Cr
Bid Lot12 shares
Price Band₹ 1,085 – 1,125
QIB75% of the net offer
NIB15% of net offer ( ~ 798.61 Cr)
Retail10% offfer (4,732,532 Shares, ₹ 532.41 Cr)
Applications for 1x Retail ~ 3.94 Lac 

Updates :

  • ANCHOR ISSUE: Ahead of its IPO, FSN E-Commerce Ventures Limited (Nykaa) IPO garnered Rs 2,395.84 crore in its anchor book allocation from 174 investors ahead of its IPO. Nykaa anchor book is  said to have elicited demand for 40x. Anchor investors include names like Black Rock, Fidelity, Govt of Singapore, Monetary Authority of Singapore, Canada Pension Plan, T. Rowe Price, Custody Bank of Japan, Tiger Global Fund, Aberdeen New India Investment, Abu Dhabi Investment Authority, Government Pension Fund Global, Neuberger Berman Investment, Societe General, Morgan Stanley, Goldman Sachs, among others. •
  • .

About FSN E-Commerce Ventures Limited (Nykaa) IPO

FSN E-Commerce Ventures operates Nykaa, which is India’s largest Omni channel play across Beauty and Fashion segments.
Nykaa is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers. It provides both online and offline services.
Nykaa was set up in 2012 by Falguni Nayar, former MD at Kotak Mahindra Capital Company. She along with husband Sanjay Nayar family trust, former CEO of KKR (PE firm) , hold 54 % stake.
As of Aug 31, 2021, company had cumulative downloads of 5.58 crore of its mobile apps.
For the five months ended August 31, 2021, 88.2% of its online Gross merchandise volume(GMV) came from mobile apps.
Company operates in two business verticals
(1) Nykaa: Beauty and personal care : 2,644 brands, mainly across make-up, skincare, haircare, fragrance, grooming, personal care, bath and body health, wellness etc. GMV (Gross merchandise volume) of Rs 3380.41 crore for FY21.
(2) Nykaa Fashion: Apparel and accessories: fashion products for women, men, kids and home. Total GMV of Rs 665.57 crore.

The company manufactures owned brand beauty and personal care.

Sells under brands such as “Nykaa Cosmetics”, “Nykaa Naturals” and “Kay Beauty”

Nykaa operates 80 stores in 40 cities in three formats:

Nykaa Luxe: offer luxury beauty experience, showcases prestige and luxury international and domestic brands.

Nykaa On-Trend: current best-selling products chosen across beauty
and personal care.

Nykaa Kiosks: free standing units usually in shopping malls. Predominantly sell owned brands

FSN E-Commerce Ventures Limited (Nykaa) IPO: Financials

Particulars / (₹ In Cr)Jun 30, 21 (3m)Jun 30, 20 (3m)2021(12)2020(12)2019(12)
Equity Share Capital15.4814.715.0614.5514.24
Net worth698.89354.01489.94322.15230.56
Revenue from Operations816.99288.642,440.901,767.531,111.39
Revenue Growth (%)   183.05%38.10%59.04%
EBITDA 26.94-45.34161.4381.0620.51
Net Profit 3.52-54.5161.95-16.34-24.54
EPS-Basic (₹ )0.08^(1.23)1.39-0.39-0.59
NAV-Basic (₹ )15.478.06117.525.55


Nykaa operates in a high potential online BPC (beauty and personal care)/Fashion market.

At present it has  penetration level of 8-12% which offers huge headroom for growth. 

It follows a unique Inventory  led  BPC  model  with  ~2.0  million  SKUs  from  3,826  national  and international brands. A stock-keeping unit (SKU) is a scannable bar code to help vendors automatically track the movement of inventory.

60% sales come from Tier2/3 cities suggesting wide spread acceptance

Has  focus  on  customer  education  through  vast  library  of  content  via

blogs, You Tube,  and in-app content aggregation hub.

Growing  own branded portfolio 

Good relationship with brands has allowed Nykaa to emerge as preferred vendor with several brands.


Highly Competitive Fashion Segment
After easing of COVID restrictions marketing expenses may increase.
Deluge of IPOs may affect the Market price.
Promoter, Falguni Nayar Family Trust, has pledged about 4.35% of Equity Share capital.
Risks at higher valuations

FSN E-Commerce Ventures Limited (Nykaa) IPO: Assessment

As per RedSeer Report, which was rnaged and paid for by the company, Nykaa has a large BPC market opportunity of Rs 1,120 billion growing at 12% per annum to Rs 1,981 billion by the year 2025.
Nykaa fashion opportunity which at present is Rs 3,794 billion is expected to grow at 18% per annum to Rs 8,702 billion in 2025.
Nykaa is well placed to capitalize on this opportunity by offering a superior customer experience, guarantee of authenticity, ability to identify contemporary trends, and deep meaningful relationships with brands.
Nykaa has been able to create strong consumer following which is reflected in 70% repeat purchase.

Nykaa is known are for commitment to Authenticity: Nykaa has developed systems and processes to ensure that the products sold on its platform are authentic, and build trust among consumers and brands.
Nykaa has put in place a profitable tech platform as well as a capital efficient business model.
The revenue grew 38% YoY to Rs. 2,441 cr in FY21, even as lockdown impacted Q1 sales. For Q1FY22, revenue grew to Rs. 817 cr, as fashion business ramped-up.
At the higher price band of Rs 1125, the offer is made at around 21.71 times Mcap/FY2021 sales. Nykaa’s FY22E Mcap/revenue may end up in range of 17x and appears high. However it is similar to other Indian unicorns some of which trade even higher at this juncture.

To Apply or Not

Nykaa is Well-placed to capitalize on favorable trends in its markets, which have excellent growth potential.
As on 27-10, Nyakka is reported to be commanding premium of Rs. 600 plus.
Valuations are rich and there is considerable euphoria which can subside.
Zomato’s successful IPO and encouraging post-listing performance has buoyed investor sentiment towards online tech startups.
I intend to apply in FSN E-Commerce Ventures (Nykaa) IPO.
May give Listing Gains.
A rush of IPOs to cash on current market sentiment poses a risk. Large IPOs like Paytm may drain out considerable liquidity from the system.
In my view even if the euphoria around the IPO may go down at the time of listing, it may still be able to return say 25% premium on a conservative estimate.
As only 10% is reserved for retail issue is likely to see heavy subscription.
Excellent Anchor book response adds to confidence. .

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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