The public issue of FSN E-Commerce Ventures, backed by Falguni Nayar and private equity firm TPG, has subscribed 1.55 times as it received bids for 4.09 crore equity shares against an IPO size of 2.64 crore shares on October 28, the first day of bidding.
The offer size has been reduced to 2.64 crore equity shares from more than 4.75 crore equity shares after the company raised Rs 2,396 crore from anchor investors on October 27.
Retail investors have put in bids for 3.50 times of their reserved portion and a part set aside for non-institutional investors was subscribed 60 percent.
Employees have subscribed for 1,69,140 equity shares against their reserved portion of 2.5 lakh shares, while qualified institutional buyers have bought 1.39 times the portion set aside for them.
This is the first public issue to hit the street in the last one month after Aditya Birla Sun Life AMC. The offer will close on November 1.
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The Nykaa and Nykaa Fashion operator aims to raise Rs 5,351.92 crore through its initial public offering (IPO) that comprises a fresh issue of Rs 630 crore by the company and an offer for sale of Rs 4,721.92 crore by selling shareholders. That means bulk of the issue size or 88 percent of the offer money, will go to selling shareholders, including promoters and investors.
The price band for the offer has been fixed at Rs 1,085-1,125 per share.
All the brokerages advised subscribing the public issue for listing gains as well as for long-term perspective, given the strong growth potential in beauty and personal care segment, strong management team, healthy financials, strong relationship with global brands, and diverse portfolio of own brands, though the issue is a bit expensive.
"The IPO is being valued at a price/sales of 21.0-21.8x FY21 revenues of Rs 2,441 crore. The company has also posted strong revenue CAGR of 48.2 percent between FY2019-20 despite the Covid crisis and register a profit in FY2021," said Jyoti Roy of Angel One.
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"While valuations may appear to be expensive on a P/E basis, Nykaa is one of the very few profitable Unicorns in India and we believe that the company is well positioned to benefit from the exponential growth in the online beauty and fashion retailing business over the next decade," he said.
Angel Broking believes that that the valuations are justified and hence recommend subscribe to the issue.
Incorporated in April 2012, FSN E-Commerce Ventures was promoted by Falguni Nayar, Sanjay Nayar, Falguni Nayar Family Trust and Sanjay Nayar Family Trust. It is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers, operating vertical Nykaa for beauty and personal care segment, and Nykaa Fashion for apparel and accessories segment.
The Nykaa IPO shares traded at Rs 1,725 in the grey market, a premium of Rs 600 or 53 percent over upper issue price band of Rs 1,125, the IPO Watch and IPO Central data showed.
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