Nykaa IPO: A Milestone for the Indian Startup Ecosystem

Nykaa as a company, revolutionised beauty and skincare products, is all ready to go public. The company after dazzling women with an excellent line of products is opening up to stock-market investors. The company which is at the helm of beauty and fashion in retailing is the innovation of Falguni Nayar a former MD at Kotak Mahindra Investment Banking and currently the CEO of Nykaa.

Nykaa IPO: Details, Date and Overview

Nykaa was incorporated in 2012 and leapfrogged into a game changing position by 2015–2016 in the e-commerce business for those indulging in online cosmetics, skincare and now clothing and footwear too.

As of August 2021, the company also has an offline channel, comprising 80 stores across 40 cities in India in three different store formats.

The company will hit primary market with its Rs 5,352 crore IPO this week. As usual, it will be a mix of a fresh issue and an offer for sale (OFS).

The face value of each share is Rs.1. The price band of FSN E-commerce Ventures IPO has been fixed between Rs 1,085–1,125. At the upper range of price band, one lot of the IPO is worth Rs 13,500. A retail bidder can bid for a maximum of 14 lots.

1. Know the Company:

Nykaa is a digital consumer technology platform, leading with content-led, lifestyle retail experience to women customers primarily. Since its origination in 2012, the company has invested both capital and creative energy towards designing a differentiated, unique journey and storytelling of brand discovery for its consumers.

It has a diversified portfolio of products in beauty, personal care and fashion, including its own brand products created by the company. The company has revolutionised the market by being not just a lifestyle retail platform but also as an incredibly consumer brand. The company offers consumers a multichannel approach to offer a seamless, smooth experience with a vision to cater to the consumers’ tastes and convenience:

1. Online:

Its online channels include mobile applications, websites and mobile sites. It has cumulative downloads of 55.8 million across all its mobile applications as of August 2021, 88.2% of the online gross merchandise value came through its mobile applications.

According to a RedSeer Report which has been exclusively commissioned and paid for by the company in connection with the offer, it has one of the highest share of mobile application-led transactions, among the leading online retail platforms in India during Financial Year 2021.

2. Offline:

Its offline channel consists of 80 physical stores across 40 cities in India over three different store formats as of August 2021. Its physical stores offer a select, choicy offerings of premium products as well as an enjoyable, seamless experience across the physical and digital worlds.

2. Nykaa IPO Details:

Strengths of the company:

• Authentic game: Nykaa brings their products directly from the manufacturers or their authorised dealers in India. They have gradually developed a deep sense of trust in their customers about the authenticity of the product which helps in long term.
• Content Approach: Nykaa is one of the first retail platform in India which has used unconventional strategies like employing external content creators to drive influencer-led education through videos on different social media platforms. As of March 2021, Nykaa has a strong network of 1363 influencers promoting the brand through makeup tutorials. Nykaa TV which has 1.1 million subscribers on Youtube is core pillar of the content strategy used by the company.
• Brand Relationships: Nykaa has forged deep relationships with different global giant brands and have established themselves as brand custodians in the mind of the customers. Nykaa partnered with for Loreal Fashion Week as an e commerce partner. It also leveraged the launch of CharlotteTilbury during the wedding season with creating an Indian bridal look with its network of Influencers.
• Portfolio of owned brands: Nykaa has an impressive portfolio of 13 owned brands. Some homegrown brands of Nykaa are quite popular among customers such as Nykaa Cosmetics, Pipa Bella and Kay Beauty.

Nykaa as company has also tread an alternative daring path to IPO.

The company has been net cash positive from operations in the last two years and has been able to increase its sales at a spectacular CAGR of 84% since 2017. With the raised amount, the company intends to invest the amount in its subsidiaries, namely, FSN Brands and/or Nykaa Fashion for funding and setting up of new retail stores across pan India.

They will use the amount to enhance the brand visibility and awareness of its individual products and for general corporate purposes.

In addition to the above objectives, the company aims to strengthen its capital base and expects to receive the benefits of listing the Equity Shares on the Stock Exchanges, including, among other things, creation of a public market for its Equity Shares in India.

The story of Falguni Nayar is an inspiring one and a women led company going for IPO is certainly a milestone in Indian startup ecosystem and reflects the rapidly changing ecosystem. An egalitarian and equal opportunity system would definitely push that entrepreneurial spirit to thrive and build more.

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