Nykaa is listed at a premium of 79%, a strong listing for an online beauty retailer

Nykaa’s ₹5,350-crore Initial Public Offering (IPO) was subscribed 82 times during its share sale that ended on November 1.

Shares of Nykaa’s parent company FSN E-Commerce Ventures Ltd made a great start in the stock markets on Wednesday. The stock was listed at ₹2018, a 79.37% premium over its issue price of ₹1125 per share. 

The only profitable unicorn to be listed on stock exchanges, Nykaa’s valuation is attractive, analysts said ahead of the issue. As primary markets heat up after the pandemic, the other unicorns that have been listed recently are CarTrade and Zomato.

Nykaa’s ₹5,350 crore initial public offering (IPO) was subscribed 82 times during the share sale that ended on November 1. 

The Gross Merchandise Value (GMV) of Nykaa has grown at 57% Compound Annual Growth Rate (CAGR) during FY19-21. GMV, or the total value of goods sold in a given period, measures the use of the Site to sell goods owned by others. Its revenue and EBITDA grew 48% and 181% CAGR in FY19-21, while it turned profitable in FY21. Ebitda margin increased to 6.6% in FY2011, with free cash flow (FCF) being positive. It has a capital efficient business model with asset turnover of 3 times in FY21. 

According to some analysts, the company’s asset-light model and strong buying propensity among millennials to buy the brand in the beauty and personal care segment make the share sale a favorable bet for investors. They added that Nykaa, which is owned by FSN E-commerce Ventures Ltd, has the potential to grow in the lifestyle e-commerce space with its scalable business model.

Post listing, the promoter’s stake will come down from 54.2% to 52.6%. The funds raised will be used for setting up of new retail stores/warehouses, loan repayment and marketing.