Nykaa founder and CEO Falguni Nayar said that the controversial bonus issue in the previous quarter was equal for all shareholders and aimed at creating value, but conceded that the beauty and lifestyle retail company erred in estimating the timeline of when the bonus shares could be traded.
Nayar said that the company had assumed shareholders would be able to start trading the bonus shares within 4-5 days of the shareholder voting on the issue.
“The bonus issue was equal for all shareholders... It can only create value and not take away value .. It was very much supported by all shareholders,” she said in a post-earnings media briefing.
Nykaa’s lock-in period ended on November 10 and the record date for the bonus issue was set at November 11. Meanwhile, the voting on the bonus issue had been completed on November 2 and the allotment of new shares happened on November 12.
Some investors saw this — timing the bonus issue with the ending of the lock-in period — as a ploy by the management to stop investors from selling their holdings as the lock-in period ended. They saw this as denying investors, particularly retail investors who entered at a high IPO price, a fair exit as they did not have access to the additional shares — five-sixths of their holding — for a few days.
For Nykaa, the issue also stabilised the stock price that fell 8 percent on November 9, and nearly 20 percent in the preceding one month. The stock opened at Rs 171 ex-bonus on November 10, and the day on a high at Rs 185, gaining more than 5 percent in an otherwise lackluster market.
The move was also seen as beneficial for early stage private equity investors of the company as it would save them taxes as they could exit the stock partially with a minimal capital gains tax.
Nykaa shares ended at Rs 149.65 apiece on the BSE on February 13, down 3.26 percent.
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