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Nykaa / FSN E-Commerce Ventures IPO – Analysis, Details, Review, Opening Date, Issue Price, Allotment Status

IPO Opens on 28 Oct 2021
IPO Closes on  01 Nov 2021
Issue Price band Rs 1085  – Rs 1125
Any Discount NA
Issue Size Rs 5375 crore
Minimum Investment 12 shares lot (min amount 13500)
Max Investment (Retail) 14 lots / 168 shares (amount Rs 189000)
Registrar Link Intime
Book Running Lead Managers ICICI Securities, JM Financial
Listing BSE/NSE
Download Red Herring Prospectus
Some of the recently listed IPOs have given 100-300% returns in 2021. Also check the list of upcoming IPOs in 2021. 
FSN E-Commerce Ventures (Nykaa) IPO Grey market Premium :

As per market observers, Nykaa IPO grey market premium (GMP) was at around Rs 610 – Rs 670

IPO Issue Allocation:

  • QIB = Not More than 75% of the offer
  • NII = Not less than 15% of the offer
  • Retail = Not less than 10% of the offer
Background:

  • FSN E-Commerce Fashion or “Nykaa“ is a multi-brand beauty, personal care and fashion platform. Nykaa is founded and promoted by Falguni Nair, a former managing director at Kotak Mahindra Capital Company
  • The company has a diverse portfolio of beauty, personal care and fashion products, including their own brand of products manufactured by them. Nykaa operates under 2 major business verticals namely Nykaa (beauty and personal care products) and Nykaa Fashion (apparel and accessories). It has offered approximately 3.1 million SKUs (stock-keeping units) from 4,078 national and international brands to its consumers across two business verticals.
  • Incorporated in 2012, Nykaa is a digitally native consumer technology platform, delivering a content-led, life style retail experience to consumers. Leading specialty Beauty and Personal Care (BPC) platform in India: Nykaa is the largest Specialty BPC Platform in India and enjoys the highest Average Order Value (AOV) among its peers. It has the largest luxury BPC platform. It is one of the fastest growing fashion platforms in India based on GMV (Gross Merchandise Value) growth. Fashion started in 2018 and now contributes ~16% to GMV, up from 10% in FY20.
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Top Shareholdings:

 

 Objective of the issue:

The IPO comprises of a fresh issue of Rs 630 crore and an offer for sale of Rs 4,721.92 crore by several selling shareholders including promoters and investors.
The firm will utilise net proceeds from fresh issuance for investment in two subsidiaries — FSN Brands and/or Nykaa Fashion – and for setting up new retail stores (Rs 42 crore). Further, the funds will also be utilised for capital expenditure and investment in subsidiaries, like Nykaa E-Retail, Nykaa Fashion and FSN Brands, and for setting up warehouses (Rs 42 crore). Apart from that, the company will also use funds for repaying debts of itself and its subsidiary Nykaa E-Retail (Rs 156 crore), and to enhance brand awareness and visibility (Rs 234 crore).
Anchor Investors:

  • Nykaa mopped up Rs 2,396 crore from 174 anchor investors ahead of its initial public offering.
  • Marquee investors participated in the anchor book included Blackrock Global Funds, BEST Investment Corporation, Emerging Markets Growth Fund, Fidelity Funds,  Government Of Singapore, Canada Pension Plan Investment Board, T Rowe Price, JP Morgan, Aberdeen Abu Dhabi Investment Authority, CLSA, Goldman Sachs, and Monetary Authority of Singapore.
  • Domestic investors including Aditya Birla Sun Life Trustee, SBI Mutual Fund, HDFC Trustee Company, Nippon Life India Trustee, Axis Mutual Fund, Kotak MF, ICICI Prudential, Franklin MF, Sundaram MF, IDFC MF, L&T MF, Tata MF, Edelweiss, and UTI MF also invested in the company, through anchor book.
  • Anchor investors bid 60 times more than the shares on offer for their category
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Financials:

  • Nykaa can sustain a CAGR of ~35% in sales, 50% in EBIDTA over coming few years with double digit margins
  • Although the brokerages expect lower margins in FY22 (lower ad spend in FY21), we expect steady margin expansion led by scale economies as it has already expanded margins from 1.8% to 6.6% over FY19-21 making it one of the few Ecom players to turn profitable
  •  IPO is at 12.6xEV/GMV on FY21 sales and ~4.7xEV/GMV on FY24 sales

Valuation as compared to its peers:  

.The issue is valued at 16.1x FY22 EV/Sales on a post issue and annualized basis, which seems to be similar to other Indian unicorns.

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Brokerage Recommendations: 
 Brokerage Recommendations
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Should you invest: 

Nykaa has strong technology led platform, strong relationship with global brands, diverse portfolio of own brands. It also has planned expansion in Middle East and Europe, growth in Tier II & III cities.

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Nykaa’s GMV/revenue/EBITDA has grown at a 57%/48%/ 181%  CAGR over FY19-21, while it turned PAT positive in FY21. EBITDA margins too improved to 6.6% in FY21 with FCF turning positive.

Considering the prevailing opportunities, investors can consider investing in Nykaa’s IPO for listing gains as well as long term opportunity it presents.

Some of the recently listed IPOs have given 100-300% returns in 2021. Also check the list of upcoming IPOs in 2021. 

Disclaimer: This is not an investment advice and is only for educational purposes. Please consult your financial advisor before taking any financial decisions. 


Important Dates:- IPO Schedule (Tentative)
Finalization of Basis of Allotment 8 Nov 2021
Initiation of Refunds 9 Nov 2021
Credit of Equity Shares: 10 Nov 2021
Listing Date: 11 Nov 2021
Subscription Details: (Will be Updated)
(Subscription-Category-Wise (no. of times) Till time : 06:00 PM) Day-1 Day-2 Day-3
QIB 4.72
NII 4.17
Retail 6.32
Employee 1.18
TOTAL 4.82
How to apply for IPO through Zerodha

Zerodha customers can apply online in this IPO using UPI as a payment gateway. Zerodha customers can apply in this IPO by login into Zerodha Console (back office) and submitting an IPO application form.

  • Visit the Zerodha website and login to Console.
  • Go to Portfolio and click the IPOs link.
  • Go to the ‘FSN E-Commerce Ventures’ row and click the ‘Bid’ button.
  • Enter your UPI ID, Quantity, and Price.
  • ‘Submit’ IPO application form.
  • Visit the UPI App (net banking or BHIM) to approve the mandate.

Disclaimer:  This article is for educational purposes and should not be treated as investment advice. Please consult with your investment advisor before making any investment decisions.

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