Online beauty solutions platform Nykaa plans to raise up to `525 crore by means of fresh challenge of shares in its upcoming initial public supplying (IPO), according to the preliminary documents filed with capital markets regulator Sebi. The present also comprises an present for sale (OFS) of up to 43.11 million shares by a clutch of current shareholders and promoters.
Though the company’s draft red herring prospectus (DRHP) did not mention the total size of the IPO, sources conscious of the discussions mentioned it is estimated to be about `3,500-4,000 crore. Majority of the funds raised will be driven by the OFS element. The IPO is most likely to worth Nykaa at an estimated $5-5.5 billion, sources mentioned.
The Sanjay Nayar Family Trust, TPG Growth, Lighthouse India Fund III, Lighthouse India III Employee Trust and Sunil Kant Munjal are amongst the promoting shareholders, according to the DRHP. The promoter and promoter group will, nonetheless, continue to hold more than 51% of the company’s shares.
Helped by the booming customer demand for digital commerce, scores of Indian tech begin-ups are hunting to go public in the coming months. Food delivery firm Zomato led the pack with a stellar D-street debut in July. Fintech player Paytm is set to launch a `16,600-crore IPO later this year, the largest because the `15,200-crore public challenge floated by Coal India in 2010 whilst Mobikwik is eyeing a `1,900-crore IPO. Nykaa and PolicyBazaar are the most current begin-ups to have set the pitch for a public industry debut.
Led by Falguni Nayar, Nykaa plans to deploy a portion of the net proceeds to fund the establishment of new brick-and-mortar retail retailers and warehouses.
Part of the fresh IPO funds will also be applied towards advertising initiatives and “repayment or prepayment of outstanding borrowings availed by our company and one of our subsidiaries, namely Nykaa E-Retail,” the firm mentioned.
India, with its biggest share of millennials and GenZ population, expanding digital adoption and enhanced consumption from modest towns aided by increasing disposable incomes, presents substantial tailwinds for the beauty and private care (BPC) segment. The general BPC commit in the nation, which presently stands at about $15 billion, is estimated to develop at a 13% CAGR in the next 5 years. The share of the on-line commit is most likely to develop at a considerable 30% CAGR for the duration of the period touching practically $3.9 billion by CY25, analysts at HSBC mentioned.
Vertical BPC players like Nykaa with its improved customer practical experience, in depth SKUs (stock maintaining units) and omni-channel offerings stand to achieve, they mentioned. “The key strategy for companies such as Nykaa is not only to focus on the mass and premium brands but also offer luxury brands from companies such as Estée Lauder to customers. BPC companies have the highest gross margins; its order values are much healthier as well – almost at `4,000, for companies such as Nykaa as customers end up buying multiple or more premium products. Nykaa and Purplle are emerging as leaders,” the analysts mentioned in a current note.
Nykaa’s income from operations enhanced to `2,440.89 crore in FY21 from `1,767.53 crore in FY20 on a consolidated basis. The beauty retailer posted total complete income of `59.7 crore in FY21, reversing losses of `16.23 crore reported in FY20.
Nykaa’s life-style portfolio spans across beauty, private care and style solutions. The firm had cumulative downloads of 43.7 million across all its mobile applications as of March 31, 2021. The firm’s offline channel comprises 73 physical retailers across 38 cities in India more than 3 various retailer formats.
Nykaa mentioned it provided roughly 2 million SKUs from 3,826 national and international brands to our shoppers across enterprise verticals as of March 31, 2021. The firm’s total GMV (gross merchandise worth) stood at `4045.98 crore in FY21, registering an raise of about 50.7% more than FY20.