Hardeep Singh
According to two people familiar with the internal discussions, Nykaa, founded by former investment banker Falguni Nayar, would limit the public sale to $500 million to $700 million. Because the discussions were private, neither party wanted to be identified.
Nykaa is a cosmetics firm based in India that specialises in multi-beauty and personal care products. The firm began as a standalone e-commerce platform before growing to include retail outlets in many major cities throughout the United States.
The firm specialises in cosmetics, skincare, haircare, fragrances, bath & body, luxury, and wellness goods for both men and women. Users may purchase professionally prepared and priced branded products on the website, which claims to have more than 1.5 million monthly visitors from India.
Nykaa presently offers three storefront categories: Luxe, On Trend, and Kiosks. Nykaa’s On Trend merchandise is limited to fashionable and stylish brands, but Nykaa’s Luxe shops carry premium and luxury brands like as Estee Lauder, Dior, Huda Beauty, and M.A.C Cosmetics, among others.
Nykaa provides grooming items for guys, which can be accessed on the Nykaa Man website and app, as well as the Nykaa Network, an online community for beauty lovers. As of today, the firm is steadfastly committed to remaining in the vertical marketplace.
The pandemic has had minimal impact on the global fashion and lifestyle sectors. Nykaa, like similar players outside of India, has grown at a breakneck pace. It will have a first-mover advantage when it hits the market. Following this IPO, Colorbar, one of Nykaa’s competitors, may seek a public offering, indicating that the company has great growth potential. They say that the increase in Nykaa’s overall worth is attributable to an increase in sales and profitability for the e-commerce platform, largely as a result of covid-related outages that have forced more consumers to buy online.
However, during the lockdown, the site saw a 70% drop in sales in April, after which it resumed displaying critical items to avoid drowning customers with non-deliverable inventory. As a consequence, by enabling hyperlocal delivery, the platform has began to grow its 70 shops across India. More than 90% of the platform’s pre-covid levels have already been restored.
Since fiscal year 2019, Nykaa has been profitable every year. It became one of 11 unicorn businesses last year after obtaining $25 million from Steadview Capital in March 2020. According to the Securities and Exchange Board of India’s listing criteria, a business can only list its shares on the main board of stock exchanges if it has a track record of profitability over the previous three years. Nykaa turned a profit for the first time in its history in fiscal year 2019, with revenues of 1,160.98 crore and costs of 1,157 crore. In fiscal 2020, revenue grew by 60% to 1,860 crore, but profit remained unchanged. In fiscal year 2019, Nykaa had a net profit of Rs.2.31 crore. In FY20, it had a profit before tax of Rs. 94 crore.
Mint reported in January, citing a source familiar with the preparations, that Nykaa was considering going public by the end of December or early 2022 at a valuation of more than $3 billion. The IPO roadshows continue, and Nykaa’s holding company, FSN Ecommerce Ventures Pvt. Ltd, will file its written red herring prospectus by the end of June or early July, with the IPO likely to commence in the March quarter of this fiscal year, according to one of the two persons stated above. Existing investors will be allowed to exit the initial public offering via a selling offer. The price range has yet to be established, but the public may be awarded a 10%-20% stake in the company in exchange for an acceptable free-float. Nykaa’s spokesperson declined to respond. Since its inception in 2012, Nykaa has grown to become India’s largest women-centric online marketplace, with over 15 million registered members and 1.5 million monthly transactions. The company separates itself from other horizontal e-commerce businesses like Flipkart and Amazon by focusing primarily on the beauty and personal care industries.
Although Paytm, Flipkart, Zomato, Policybazaar, Grofers, and Pepperfry are all attempting to go public, Nykaa is the only profitable firm that will meet the criteria for listing on the main board of Indian stock markets.
Nykaa was formed in 2012, and it all began there. Falguni Nayar discovered an inconsistency in the beauty items market in India, which wasn’t on par with the product’s scope in other countries like France or Japan, despite high demand, due to a lack of product availability in many places, while on the lookout for a promising business opportunity in India. As a result, she and her husband, Sanjay Nayar, co-founded Nykaa. The platform began as an online organisation and has evolved into an omnichannel platform throughout the years.
Falguni Nayar, an IIM Ahmedabad MBA graduate, joined Kotak Mahindra’s investment banking team immediately after graduation. She was promoted to Managing Director of the same bank division in 2005.
She spent over 18 years with Kotak Mahindra before opting to quit banking to explore other interests. She saw the untapped potential of the internet beauty business. There was a dearth of accessible online brands and goods that people could trust and purchase with confidence at the time, thus she viewed Nykaa as having promise.
Nykaa’s stocking strategy is largely what distinguishes it from its competitors. The items are purchased through brands and wholesalers and then sold directly to clients under this method. A marketplace approach, in which items are offered by third-party merchants, is the polar opposite. Nykaa will be able to have a tighter grip on its products as a result, reducing the chances of forged items making their way into the market.
