Insiders at FSN E-Commerce Ventures, operator of e-commerce beauty products major Nykaa, sold stocks worth $19 million (or Rs 139 crore) last week amid the intense sell-off on the counter, data on BSE showed.
Insiders, many of whom are part of the top brass at Nykaa, sold 984,528 shares of the company at an average price of Rs 1,424 per share, which is a 27 percent premium to the IPO price of Rs 1,125 per share.
The list of sellers includes Chief Financial Officer Arvind Agarwal, Chief Technology Officer Sanjay Suri, CEO of private label beauty brands Reena Chhabra, CEO NykaaMan Nihir Parikh, and Vice President Neha Grover.
To be sure, Agarwal, Suri, Chhabra, Parikh and Grover still hold between 0.05-0.38 percent stakes in the company. The top management of the company has been allotted equity shares of the company as part of Nykaa’s employees’ stock option program.
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The paring of holding by members of Nykaa’s top management has come in between a sharp drawdown in the stock. Shares of Nykaa have fallen close to 48 percent from their record highs hit in November after the stock rallied more than 100 percent from its IPO price. In the same period, the Nifty 50 index has declined only 6-7 percent.
Nykaa’s IPO, which opened in late October 2021, was a success with the issue being subscribed 82 times led by a staggering 112 times subscriptions by high net-worth individuals. The stock had debuted on the stock exchanges at a premium of 79 percent to its issue price.
Since its IPO month, however, the stock has been on a downward spiral as investors questioned the sustainability of the company’s rich valuation amid signs that global interest rates were set to rise rapidly.
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High-interest rates make companies like Nykaa less attractive for investors given that the net present value of their profits declines sharply even with a minor rise in interest rates. Further, Nykaa’s December quarter earnings were unimpressive as net profit declined 59 percent on-year driven by higher expenses.