Nykaa’s initial public offering of Rs 5,352 crore which is scheduled to open for subscription on Thursday, 28 October has set a price of Rs 1,085-1,125 per share. The public offering will close for subscription on November 1, 2021, according to the prospectus (RHP). In the primary market, Nika share prices were seen at a premium of Rs 660 per share over the issue price. On Monday, the shares were seen trading at 1,785 rupees per share, roughly 60 per cent of the premium, in the gray market, according to people who deal in the company’s unlisted shares.
FSN E-Commerce Ventures, which operates Nykaa and Nykaa Fashion, is promoted by Falguni Nayar and backed by private equity firm TPG. Bids can be submitted for a minimum of 12 shares and multiples of 12 shares thereafter. Up to 75 percent of the net issuance will be reserved to qualified institutional buyers (QIBs), 10 percent to individual investors and the remaining 15 percent to non-institutional investors. Existing employees who hold stock options in Nykaa also have the option to offload a total of 2.5 thousand shares of stock in the next public offering. The company offered a discount of up to 10 percent from the offer price to eligible employees who bid on the employee reservation portion.
After a small hiatus, the initial market is set to see massive initial public offerings (IPOs) for the startup. One analyst said that as the countdown to Nykaa’s IPO begins, the market appears excited for the company because unlike startups that burn cash and losses, Nykaa is a profitable company. Its revenue grew more than 38% in fiscal year 2021 compared to fiscal year 2020. With approx. 8% penetration and the beauty and personal care segment in the e-commerce category is one of the most un-penetrated segments compared to the mature e-scrap categories providing plenty of room for startups like Nykaa,” Abhay Doshi, founder of UnlistedArena.com, deals in pre-IPO and equity Not included, according to Financial Express Online.
Doshi added that in the upper range of Rs 1,125, his FY21 sales price comes in at around 21.6x, which might sound exorbitant, but that is how startups are currently valued. “The quality of the promoters, the profitability, the growth and the versatility of the IPOs of startups should ensure the maximum attractiveness of this issue,” he said.
The weighted average return on net worth for the last three fiscals is 2.82 percent. The company’s fiscal 2021 fiscal year 2021 price/earnings ratio based on diluted EPS on a consolidated basis is as high as 839.55 times. The average cost of acquiring the shares held by the selling shareholders ranges from nil per share to Rs 117.67 per share and the bid price at the upper end of the price range is Rs 1,125. The analyst said Nykaa’s valuations in the upper price range came in at 839.5 times price-earnings, 21.6 times sales in FY21 and 16.2 times annual sales in FY22. “Now, of course, given the valuation metrics mentioned above, valuations are clearly expensive. That, unlike other startup listings this year, Nykaa announced its earnings, led by an exceptional promoter and promoter group (Falguni Nayar and her family). It has grown in a way that aims to create a sustainable business with profitability in mind,” said Aditya Kondawar, COO of JST Investments. , for Financial Express Online.
Going forward, Kondawar expects the company to do well in the beauty products market. “We expect operating efficiencies to kick in given the way the major capital expenditures have been carried out on the foundation side of the company. One should only be aware that current valuations may mean the stock may not move anywhere for an extended period of time despite good trading performance. We have a “subscription” to Nykaa’s IPO for the very long term, and the exception is if anything changes.”
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