Sunday, October 17, 2021

Nykaa gets Sebi nod for IPO | offer by month-end

Nykaa gets Sebi nod for IPO | offer by month-end 

Market regulator Securities and Exchange Board of India (Sebi) has granted approval for the initial public offering (IPO) of FSN E-Commerce Ventures, the company that operates online beauty store Nykaa.

Sources said the Falguni and Sanjay Nayar-promoted company is looking to launch its maiden offering by the end of this month at valuations of more than Rs 45,000 crore ($6 billion).

The total issue size, including the fresh issue component, could be revised upwards to over Rs 5,300 crore, a source added. However, the final call on valuations will be taken closer to the launch date.

Nykaa’s IPO will be keenly eyed as it comes close on heels of the first successful startup IPO by online food delivery company Zomato in July.

Nykaa’s IPO will require compulsory 75 per cent qualified institutional buyer (QIB) participation as it has incurred losses in two of the previous three financial years. The retail quota for the IPO will be 10 per cent as against 35 per cent in IPOs that meet the profitability criteria.

Broking firm Jefferies in a recent note said Nykaa has demonstrated growth and profitability don’t have to be mutually exclusive.

“The online opportunity in India is attracting players across categories and growth in most cases is at the cost of profitability. This, by itself, is a huge differentiator for Nykaa, a vertical e-commerce powerhouse in the beauty space. Product assortment, discovery and authenticity drive high repeats and the content ecosystem is engaging,” the note said.

Unlike other startups which still have a long road ahead for turning profitable, Nykaa had reported a bottomline of Rs 62 crore in FY21 on revenues of Rs 2,440 crore and gross merchandising value (GMV) of $540 million.

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