Nykaa, the widely known name for Falguni Nayar-promoted FSN E-Commerce Ventures, saw bumper demand from investors on its debut day of November 10, as the stock doubled despite volatility in the market, backed by strong IPO subscription demand and superior management team along with strong brand and financials.
The stock rallied by Rs 1,081.70 or 96.15 percent to close at Rs 2,206.70 against issue price of Rs 1,125 on the BSE, and on the National Stock Exchange, it shot up 96 percent to Rs 2,205.80. It traded with volume of 3.59 crore equity shares.
FSN E-Commerce crossed Rs 1 lakh crore market cap, at Rs 1,04,360.85 crore, on the listing day itself, while the same at a day's high price of Rs 2,248.10 stood at Rs 1.06 lakh crore.
The stock opened at Rs 2,001, a 79 percent premium over issue price, which was much higher than analysts' expectations and grey market premium.
"Nykaa made a bumper listing today. It is among the rare lucrative new edge businesses. Furthermore, it is a high-growth company and into the right business where it may remain to grow in double digits for many years. We are bullish on this counter and see it as a good bet for the long term," said Rahul Sharma, Co-Founder at Equity99.
Sneha Poddar, AVP Retail Research at Motilal Oswal Financial Services, also said they liked Nykaa given its leadership position in online BPC market, customer centric approach, profitable tech platform and capital efficient business model.
The Rs 5,352-crore public issue of Nykaa had received strong demand from investors, subscribing 81.78 times during October 28-November 1. The company will utilise net fresh issue proceeds (of Rs 630 crore) for expansion, debt repayment and brand awareness, while the offer for sale money of Rs 4,722 crore was received by selling shareholders including promoter and investors.
Brand Nykaa, founded and promoted by banker-turned-businesswoman Falguni Nayar, operates beauty & personal care (BPC) segment, and Nykaa Fashion deals in apparel & accessories through online as well as offline channels.
It is one of the few profitable new age businesses, having a profit of Rs 61.95 crore in FY21 against a loss of Rs 16.34 crore in FY20. It had reported a 38.10 percent growth in revenue at Rs 2,440.89 crore for the financial year FY21, compared to the previous year.
"It is one of the very few profitable new-age company and is the first women led unicorn which also attracted lot of investor interest. Apart from leadership in online BPC in India, Nykaa is also one of the fastest growing fashion platforms in India based on GMV (gross merchandise value). Given 35 percent market share of Nykaa in online BPC, we believe Nykaa is rightly placed to tap the high growth digital/online penetration in BPC/Fashion market," said Sneha Poddar.
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