Prior to founding Nykaa, Falguni Nayar was associated with Kotak Mahindra Capital Company Limited for 18 years where she also served as a managing director.
Cosmetics retailer Nykaa has filed papers with market regulator Sebi to raise around Rs 4,000 crore via an initial public offering (IPO), joining a growing list of consumer tech and internet companies eyeing a market debut. Moneycontrol has reviewed a copy of the firm’s draft red herring prospectus.
Moneycontrol had first reported the filing of the DRHP by the firm on August 2, 2021.
We could not elicit an immediate comment from Nykaa on the move.
Nykaa was founded in 2012 by former investment banker Falguni Nayar and is a leading destination for beauty products. The company now boasts of over 1,500 brands in its portfolio, including leading luxury labels like Bobbi Brown, L’Occitane and Estee Lauder. It is possibly the only profitable unicorn that is going public as part of the ongoing IPO boom in the domestic markets.
Kotak Mahindra Capital, Morgan Stanley, Bofa Securities, Citi, ICICI Securities and JM Financial are the i-bankers working on the issue. AZB & Partners is the legal counsel to the company and the promoter selling shareholders, Cyril Amarchand Mangaldas is advising the i-bankers while Trilegal is advising the investor selling shareholders, according to the firm’s DRHP.
Here are a few of the key takeaways from the DRHP -
The offer consists of a fresh issue of up to Rs 525 crore and an OFS or offer for sale component of up to 43,111,670 equity shares by the selling shareholders.
WHO WILL PARTICIPATE IN THE OFS?
The list of key selling shareholders include Sanjay Nayar Family Trust, private equity firm TPG Growth, Lighthouse India, Sunil Kant Munjal, J M Financial and Investment Consultancy Services Private Ltd, Yogesh Agencies & Investments Private Limited, Harindarpal Singh Banga jointly with Indra Banga and others.
USAGE OF IPO PROCEEDS
A) Investment in certain of its Subsidiaries, namely, FSN Brands and / or Nykaa Fashion for funding the set-up of new retail stores
B) Capital expenditure to be incurred by the Company and investment in certain of its Subsidiaries, namely, Nykaa E-Retail, FSN Brands and Nykaa Fashion for funding the set-up of new warehouses
C) Repayment or prepayment of outstanding borrowings availed by the Company and one of its subsidiaries, namely, Nykaa E-Retail
D) Expenditure to enhance the visibility and awareness of its brands
E) General corporate purposes
THE ‘BEAUTIFUL’ OPPORTUNITY
Nykaa believes it has a large market opportunity aggregating $152 billion in the growing beauty, personal care and fashion industry by the calendar year 2025 in India. The Indian beauty and personal care market is estimated to grow to approximately $28 billion by the calendar year 2025 from $16 billion in the calendar year 2020. The Indian fashion market is estimated to grow to approximately $124 billion by the calendar year 2025 from $54 billion in the calendar year 2020. (Source: RedSeer Report)
NYKAA: THE OMNICHANNEL STRATEGY
Online: The firm’s online channels include mobile applications, websites and mobile sites. As of March 31, 2021, it had cumulative downloads of 43.7 million across all its mobile applications and during the financial year 2021, 86.7% of its online gross merchandise value (GMV) came through its mobile applications. According to the RedSeer report, the firm has one of the highest shares of mobile application-led transactions, among the leading online retail platforms in India during financial year 2021.
Offline: As of March 31, 2021, Nykaa operated 73 physical stores (comprising 72 stores for beauty and personal care products and one store for fashion products) in 38 cities of India across three formats.
NYKAA: THE NUMBERS GAME
In the financial year 2021, the firm’s total GMV was Rs 4,045.98 crore, which grew by 50.7% over the financial year 2020. It’s revenue from operations in the financial year 2021 was Rs 2,440.89 crore which grew 38.10% from the financial year 2020. The restated profit for the year in the financial year 2021 was Rs 61.94 crore, as compared to a restated loss of Rs 16.34 crore for the financial year 2020. Nykaa generated an EBITDA margin of 6.61% in the financial year 2021.
THE WOMAN BEHIND NYKAA
Falguni Nayar, 58, is the founder, Executive Chairperson & Managing Director and Chief Executive Officer of the company. She holds a post-graduate diploma in management from the Indian Institute of Management, Ahmedabad. She has over 26 years of experience in e-commerce, investment banking and broking. Prior to founding Nykaa, she was associated with Kotak Mahindra Capital Company Limited for 18 years where she also served as a managing director. She has also served on the boards of various companies, including Tata Motors Limited and Aviva Life Insurance Company India Limited. Presently, she serves as an independent on the boards of various companies including, Kotak Securities Limited, ACC Limited and Dabur India Limited.